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BAM 570 E-Commerce Management

iii

BAM 570 E-Commerce Management

Tracking Your Academic Activities To meet both accreditation requirements and award academic credit, educational institutions must document the total number of hours student spend completing designated academic activities related to their coursework.

The total hours are then translated into academic credit based on a prescribed method of measuring educational attainment known as the Carnegie Unit. 90 hours of student preparation time and 45 hours of student engagement time are required for a 3 credit hour course.

Using the attached form as an example, keep track of the time you spend on each lesson, pre-test, self-test, unit test, writing assignment, reading assignment, outside reading, final examination, etc. You will not be required to turn in the worksheet, however at the end of the course you will receive a Student Course Survey and the final question will ask how long it took you to complete the course. Your assistance in completing this requirement and providing the university with this valuable data is greatly appreciated.

As you fill out the worksheet, please keep in mind that your Academic Engagement Activities should total approximately 45 hours. Some samples of this type of activity may include:

Lesson Review Exercises

Key Term Reviews

Analysis

Study Guide Review

Writing Assignments

Review Grading Rubric

Unit Examinations

Proctored Final Examination

Course Academic Online Discussions

Student/Instructor Interaction

Documents/Student Resources

As you fill out the Academic Preparation Activities, please keep in mind that these should total approximately 90 hours. Some samples of this type of activity may include:

Pre-Test

Reading Assignments

Key Term Reviews

Studying for Examinations

Writing Assignments

Review Grading Rubric

Study Lesson Review Exercises

Internet/Web Research

Reading Websites

Suggested Online Readings

E-Commerce Times http://www.ecommercetimes.com

International Trade Administration http://www.ita.doc.gov

Bloomberg Businessweek http://www.businessweek.com

All about social networking http://www.switched.com/category/@socialnetworking

B2B Marketing on Social Networks http://www.emarketer.com/Report.aspx?code=emarketer_2000516

B2B resources http://b2btoday.com/

TechCrunch www.techcrunch.com

IT-related issues http://www.itworld.com/green-it

Electronic privacy http://epic.org/

Table of Contents

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BAM 570 E-Commerce Management

Syllabus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vi - xxiii

Unit One Chapter 1: Overview of Electronic Commerce . . . . . . . . . . . . . . . . . . . . . 1

Chapter 2: E-Marketplaces: Mechanisms, Tools, and Impacts of E-Commerce . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Chapter 3: Retailing in Electronic Commerce: Products and Services . . . 23

Unit 1 Examination Instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

Unit 1 Examination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

Unit 1 Writing Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

Unit Two

Chapter 4: Consumer Behavior, Internet Marketing, and Advertising . . . . . 42

Chapter 5: B2B E-Commerce . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

Chapter 6: E-Supply Chains, Collaborative Commerce, and Corporate Portals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64

Unit 2 Examination Instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75

Unit 2 Examination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76

Unit 2 Writing Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81

Unit Three

Chapter 7: Innovative EC Systems: From E-Government and E-Learning to Consumer-to-Consumer E-Commerce . . . . . . . . . . . . . . . . . . . . . . . . . . 83

Chapter 8: Mobile Computing and Commerce and Pervasive Computing . . 94

Chapter 9: The Web 2.0 Environment and Social Networks . . . . . . . . . . . 105

Unit 3 Examination Instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116

Unit 3 Examination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117

Unit 3 Writing Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122

Unit Four Chapter 13: E-Commerce Strategy and Global EC . . . . . . . . . . . . . . . . . 124

Chapter 14: Economics and Justification of Electronic Commerce . . . . . . 135

Chapter 15: Launching a Successful Online Business and EC Projects . . . 146

Chapter 16: Regulatory, Ethical, and Compliance Issues in EC . . . . . . . . 157

Table of Contents

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BAM 570 E-Commerce Management

Unit 4 Examination Instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169

Unit 4 Examination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 170

Unit 4 Writing Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175

Final Examination Instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 177

Final Examination Scheduling Form . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 178

Objectives

BAM 570 E-Commerce Management

Chapter One Overview of Electronic Commerce

Learning Objectives

Upon successful completion of this chapter, you should be able to:

1. Distinguish electronic commerce (EC) and consider its various categories.

2. Assess the content and framework of EC.

3. Evaluate the major types of EC transactions.

4. Explicate e-commerce 2.0.

5. Determine the elements of the digital world.

6. Consider the drivers of EC as they relate to business pressures and organizational responses.

7. Relay some EC business models.

8. Compare the benefits and limitations of EC to organizations, consumers and society.

Instructions to Students • Read pages 1 - 46 of your textbook

• Reference: Electronic Commerce: A Managerial Perspective by Efraim Turban, David King, Jae Lee, Ting-Peng Liang, Deborrah Turban, 2010

Overview

BAM 570 E-Commerce Management

The EC framework is made up of the following components: people, the public policy, technical standards and protocols, business partners and support services.

The major transactional types of EC include: business-to-business, business-to-consumer, business-to-business-to-consumer, consumer-to-business, consumer-to-consumer, mobile commerce, intrabusiness EC, business-to-employee, collaborative commerce, nonbusiness EC, electronic government and exchange-to-exchange.

The major landmarks in EC history began with the use of EDI to transmit business information. This was followed by a wide public acceptance of the Internet. The next major landmark was the development of several early electronic commerce sites online and the growth of the “new economy.” Another major landmark is the winding down of many of these “new economy” businesses.

A digital economy is an economy that is based on digital technologies, including digital communication networks, computers, software and other related information technologies. It may also be called the Internet economy, the new economy or the Web economy.

The major business pressures faced by organizations can be divided into markets, societal and technological categories.

A business plan is a written document that identifies the business goals and outlines the plan to achieve them. A business case is a written document that is used by managers to gather funding for specific applications for projects; its major emphasis is the justification for specific investment. A business model is a method of doing business by which a company can generate revenue to sustain itself.

Key Terms

BAM 570 E-Commerce Management

The key terms listed below are terms you should be familiar with. Write your definition below each item. Check your answers at the end of this chapter.

Business model:

Corporate portal:

Click-and-mortar (click-and-brick) organizations:

Virtual (pure-play) organizations:

Social computing:

Web 2.0:

Digital economy:

Digital enterprise:

Interorganizational Information Systems (IOS):

Value proposition:

Summary

BAM 570 E-Commerce Management

EC involves conducting transactions electronically. Its major categories are pure versus partial EC, Internet based versus non-Internet based, and electronic markets versus interorganizational systems.

The applications of EC, and there are many, are based on infrastructures and are supported by people, public policy and technical standards, marketing and advertising, support services, such as logistics, security, and payment services and business partners all tied together by management.

EC is a major product of the digital and technological revolution, which enables companies to simultaneously increase both growth and profits. This revolution enables digitization of products, services and information.

The business environment is changing rapidly due to technological breakthroughs, globalization, societal changes, deregulations and more. The changing business environment forces organizations to respond. Traditional responses may not be sufficient because of the magnitude of the pressures and the pace of the changes involved. Therefore, organizations must frequently innovate and re-engineer their operations. In many cases, EC is the major facilitator of such organizational responses.

EC provides strategic advantage so organizations can compete better. Also, organizations can go into remote and global markets for both selling and buying at better prices. Organizations can speed time-to-market to gain competitive advantage. They can improve the internal and external supply chain as well as increase collaboration. Finally, they can better comply to government regulations.

Self Test

BAM 570 E-Commerce Management

Multiple Choice Questions (Circle the correct answer)

1) RFID technology was used to support each of the following activities at the 2008 Beijing Olympics except:

a. ensuring safety of athletes’ food. b. blogging on social networks. c. preventing the sale of counterfeit tickets. d. tracking marathon runners.

2) EC can take several forms depending on the degree of digitization of the following three dimensions:

a. the product or service sold, the process, and the delivery method. b. the business process, the collaboration, and the transaction. c. the payment method, the delivery method, and the production method. d. the marketing channel, the agent, and the collaboration method.

3) What is a corporate or government network that uses Internet tools, such as Web browsers and Internet protocols?

a. Social network b. Extranet c. Intranet d. E-market

4) EC applications are supported by infrastructures and by each of the following support areas except:

a. people. b. public policy. c. marketing and advertisement. d. mobile devices.

5) A business, such as Apple, doing online transactions with its trading partners is an example of ________.

a. B2B b. B2C c. e-CRM d. EDI

Self Test

BAM 570 E-Commerce Management

6) Intrabusiness EC is usually performed over intranets and/or ________.

a. corporate portals b. mobile networks c. exchanges d. P2P networks

7) Many companies employ a(n) ________, which is a gateway for customers, employees and partners to reach corporate information and to communicate with the company.

a. corporate portal b. intranet c. extranet d. social network

8) A ________ is a series of activities that a company performs to achieve its goals, such as making a profit, at various stages of the production process.

a. marketing strategy b. business model c. value chain d. business plan

9) Major barriers to EC include all of the following except:

a. cost. b. lack of potential customers. c. implementation difficulties. d. lack of technology.

10) Which of the following is a technological limitation of EC?

a. Security and privacy concerns that deter customers from buying b. Difficulty obtaining venture capital c. Order fulfillment requirements of large-scale B2C d. Unresolved taxation, public policy, and legal issues

Critical Analysis

The Critical Analysis questions are designed to help you gain a deeper understanding of the subject matter, develop an increased ability to apply what you have learned and integrate this knowledge into a greater understanding and appreciation for your field of study. Completion of the following questions will help you outline your answers and organize your thoughts within an appropriate framework. These practice questions will not be graded, but you should apply the same analytical skills and writing proficiencies that you will need for the unit essays. We sug- gest writing your answers on another piece of paper and comparing your results to the suggested answers at the end of this chapter to help you identify any areas you need to review.

Critical Analysis / Case Study Problems

BAM 570 E-Commerce Management

1. Differentiate between EC and e-business.

2. Chart the major transactional types of EC.

3. Distinguish the major landmarks in EC history.

Answer Keys

BAM 570 E-Commerce Management

Key Term Definitions

Business model: A method of doing business by which a company can generate revenue to sustain itself.

Corporate portal: A major gateway through which employees, business partners, and the public can enter a corporate Website.

Click-and-mortar (click-and-brick) organizations: Organizations that conduct some e-commerce activities, usually as an additional marketing channel.

Virtual (pure-play) organizations: Organizations that conduct their business activities solely online.

Social computing: An approach aimed at making the human-computer interface more natural.

Web 2.0: The second-generation of Internet-based services that let people collaborate and share information online in new ways, such as social networking sites, wikis, communication tools, and folksonomies.

Digital economy: An economy that is based on digital technologies, including digital communication networks, computers, software, and other related information technologies; also called the Internet economy, the new economy, or the Web economy.

Digital enterprise: A new business model that uses IT in a fundamental way to accomplish one or more of three basic objectives: reach and engage customers more effectively, boost employee productivity, and improve operating efficiency. It uses converged communication and computing technology in a way that improves business processes.

Interorganizational information systems (IOSs): Communications systems that allow routine transaction processing and information flow between two or more organizations.

Value proposition: The benefits a company can derive from using EC.

Answer Keys

BAM 570 E-Commerce Management

Answers to Self Test

1) b

2) a

3) c

4) d

5) a

6) a

7) a

8) b

9) d

10) c

Solutions Guide

Critical Analysis / Case Study Problems - Suggested Solutions

BAM 570 E-Commerce Management

1. Differentiate between EC and e-business.

Electronic commerce is the process of buying, selling, or exchanging products, services, and information via computer networks. E-business is a broader definition of EC that includes not just the buying and selling of goods and services, but also servicing customers, collaborating with business partners and conducting electronic transactions within an organization.

2. Chart the major transactional types of EC.

The major transactional types of EC include: business-to-business, business-to-consumer, business-to- business-to-consumer, consumer-to-business, consumer-to-consumer, mobile commerce, intrabusiness EC, business-to-employee, collaborative commerce, nonbusiness EC, electronic government, and exchange-to- exchange.

3. Distinguish the major landmarks in EC history.

Notes

BAM 570 E-Commerce Management

Objectives

BAM 570 E-Commerce Management

Chapter Two E-Marketplaces: Mechanisms, Tools and Impacts of E-Commerce

Learning Objectives

Upon successful completion of this chapter, you should be able to:

1. Detail the major electronic commerce (EC) activities and processes and the mechanisms that support them.

2. Propose e-marketplaces and list their components.

3. Create an invenvory of the major types of e-marketplaces and describe their features.

4. Characterize the major types of auctions including their benefits and limitations.

5. Evaluate bartering and negotiating online.

6. Judge competition in the digital economy.

7. Consider the impact of e-marketplaces on organizations, intermediation and industries.

Instructions to Students • Read pages 47 – 97 of your textbook

• Reference: Electronic Commerce: A Managerial Perspective by Efraim Turban, David King, Jae Lee, Ting-Peng Liang, Deborrah Turban, 2010

Overview

BAM 570 E-Commerce Management

All functional areas of an organization are affected by e-markets. Broadly, e-markets improve direct marketing and transform and redefine organizations. Direct marketing (manufacturers to customers) and one-to-one marketing and advertising are becoming the norm, and mass customization and personalization are taking off. Production is moving to a build-to-order model, changing supply chain relationships and reducing cycle time. Virtual manufacturing is also on the rise. Financial systems are becoming more efficient as they become networked with other business functions, and the human resources activities of recruiting, evaluation and training are being managed more efficiently due to employees’ interactions with machines.

Key Terms

BAM 570 E-Commerce Management

Back end:

Build-to-order (pull system):

Differentiation:

Digital products:

Dynamic pricing:

Front end:

Infomediaries:

Folksonomy (collaborative tagging, social classification, social indexing, social tagging):

Avatars:

Search engine:

The key terms listed below are terms you should be familiar with. Write your definition below each item. Check your answers at the end of this chapter.

Summary

BAM 570 E-Commerce Management

A marketspace or e-marketplace is a virtual market that does not suffer from limitations of space, time or borders. As such, it can be very effective. Its major components include customers, sellers, products (some digital), infrastructure, front-end processes, back-end activities, electronic intermediaries, other business partners and support services.

The role of intermediaries will change as e-markets develop; some will be eliminated (disintermediation), others will change their roles and prosper (reintermediation). In the B2B area, for example, e-distributors connect manufacturers with buyers by aggregating electronic catalogs of many suppliers. New value added services that range from constant creation to syndication are mushrooming.

The major mechanisms in e-markets are electronic catalogs, search engines, software (intelligent) agents and electronic shopping carts. These mechanisms facilitate EC by providing a user-friendly shopping environment.

The major benefits of auctions for sellers are the ability to reach many buyers, to sell quickly and to save on commissions to intermediaries. Buyers have a chance to obtain bargains and collectibles while shopping from their homes. The major limitation is the possibility of fraud.

Electronic bartering can greatly facilitate the swapping of goods and services among organizations, thanks to improved search and matching capabilities which is done in bartering exchanges. Software agents can facilitate online negotiation.

Competition in online markets is very intense due to the increased power of buyers, the ability to find the lowest price and the ease of switching to another vendor. There is more global competition as well.

Self Test

BAM 570 E-Commerce Management

Multiple Choice Questions (Circle the correct answer)

1) The cost curves of digital products differ from the cost curves of physical products because in digitization ____________.

a. most costs are variable and fixed costs are low b. most costs are fixed and variable costs are very low c. most costs are fixed, but variable costs are high d. all costs are variable

2) Because of their cost curve, digital products profits will ____________.

a. remain constant regardless of volume, once the variable costs are paid b. decrease as volume increases, once labor costs are paid c. increase very rapidly as volume increases, once the fixed costs are paid d. increase rapidly as volume increases, once the fixed costs are paid

3) The major _____________ e-marketplaces are storefronts and Internet malls.

a. B2B b. C2B c. B2B2C d. B2C

4) Insurance companies and hotels sell services through storefronts called ____________.

a. RSS b. browsers c. portals d. wikis

5) Human or electronic intermediaries attempt to reduce each of the following limitations of direct interaction except:

a. search costs. b. lack of privacy. c. contract risk. d. product distribution.

Self Test

BAM 570 E-Commerce Management

6) Customized catalogs are especially useful in B2B e-commerce for each of the following reasons except:

a. E-catalogs can be designed to show only the items that the employees in a specific organization are allowed to purchase. b. Intranets, in particular, can deliver customized catalogs to different business customers. c. E-catalogs can show the buyer’s ID number for the item, model, or SKU number rather than the seller’s ID numbers. d. E-catalogs can be customized to show the same item to different customers at different prices, reflecting discounts or purchase-contract agreements.

7) The major challenge faced by ________ is the need to index documents from a variety of sources such as file systems, intranets, document management systems, e-mail and databases and then present a consolidated list of relevance-ranked documents.

a. mobile portals b. intelligent engines c. enterprise searches d. knowledge portals

8) Which of the following is a Web 2.0 application?

a. Auctions b. Blogs c. Shopping carts d. E-catalogs

9) Which is not one of the seven principles for building effective blogs?

a. Set up the blog so that each post gets its own permanent URL. b. Blog frequently and create at least half a dozen posts every weekday. c. Focus on a broad topic to appeal to a large audience. d. Make friends with other bloggers, online and off.

10) The elimination of various types of agents that mediate between buyers and sellers, such as travel and insurance agents, is referred to as _____________.

a. automation b. disintermediation c. remediation d. e-distribution

Critical Analysis

Critical Analysis / Case Study Problems

BAM 570 E-Commerce Management

1. Evaluate how customized catalogs are created and used.

2. Relay the benefits of electronic auctions over traditional (off-line) auctions.

3. Chart the major benefits of auctions to buyers, sellers, and auctioneers.

Answer Keys

BAM 570 E-Commerce Management

Key Term Definitions

Back end: The activities that support online order-taking, including fulfillment, inventory management, purchasing from suppliers, payment processing, packaging and delivery.

Build-to-order (pull system): A manufacturing process that starts with an order (usually customized). Once the order is paid for, the vendor starts to fulfill it.

Differentiation: Providing a product or service that is unique.

Digital products: Goods that can be transformed to digital format and delivered over the Internet.

Dynamic pricing: Prices that change based on supply and demand relationships at any given time.

Front end: The portion of an e-seller’s business processes through which customers interact, including the seller’s portal, electronic catalogs, a shopping cart, a search engine and a payment gateway.

Infomediaries: Electronic intermediaries that control information flow in cyberspace, often aggregating information and selling it to others.

Folksonomy (collaborative tagging, social classification, social indexing, social tagging): The practice and method of collaboratively creating, classifying, and managing tags to annotate and categorize content.

Avatars: Animated computer characters that exhibit humanlike movements and behaviors.

Search engine: A computer program that can access a database of Internet resources, search for specific information or keywords, and report the results.

Answer Keys

BAM 570 E-Commerce Management

Answers to Self Test

1) b

2) c

3) d

4) c

5) d

6) b

7) c

8) b

9) c

10) b

Solutions Guide

Critical Analysis / Case Study Problems - Suggested Solutions

BAM 570 E-Commerce Management

1. Evaluate how customized catalogs are created and used.

Customized catalogs take information from existing print catalogs and product information and digitize it. This digitized information is then stored in a database. Once the information is in a database it is very easy to select products and groups of products to display to a potential customer. These products and groups of products are selected and presented to the customer through a custom printed catalog or through a personalized Website.

2. Relay the benefits of electronic auctions over traditional (off-line) auctions.

Electronic auctions are superior to traditional auctions because they do not suffer the same limitations. Traditional auctions are limited by the short duration of the auction itself and the physical location of the auction. Electronic auctions can occur over greater time periods and are not limited by location since they take place in electronic market spaces.

3. Chart the major benefits of auctions to buyers, sellers, and auctioneers.

Auctions provide a wide variety of benefits to buyers, sellers and auctioneers. Auctions provide several advantages to buyers because they allow them to purchase goods from a wide variety of sellers without the constraint of time or place. The wide variety of different auction styles meets the needs of a wide variety of different purchasers. Auctions benefit sellers by allowing them to sell to a huge potential marketplace not constrained by time or place. Additionally, it allows them to sell goods that may only have a very small target market. Sellers are also able to sell their goods at the prevailing global market price. Auctioneers benefit from auctions because it provides a business model that allows their firms to stay in business. They are able to benefit from usage by both buyers and sellers.

Notes

BAM 570 E-Commerce Management

Objectives

BAM 570 E-Commerce Management

Chapter Three Retailing in Electronic Commerce: Products and Services

Learning Objectives

Upon successful completion of this chapter, you should be able to:

1. Characterize electronic retailing (e-tailing).

2. Conclude how online travel and tourism services operate and their impact on the industry.

3. Analyze the online employment market including its participants, benefits and limitations.

4. Chart online stock-trading services.

5. Consider cyberbanking and online personal finance.

6. Assess the delivery of digital products and online entertainment.

7. Examine disintermediation and other B2C strategic issues.

Instructions to Students • Read pages 98 – 141 of your textbook

• Reference: Electronic Commerce: A Managerial Perspective by Efraim Turban, David King, Jae Lee, Ting-Peng Liang, Deborrah Turban, 2010

Overview

BAM 570 E-Commerce Management

B2C e-commerce is concerned with businesses selling products to customers. A variety of goods sell well online. These goods include: computers and electronics, sporting goods, office supplies, books and music, toys, health and beauty products, entertainment, apparel, services and cars.

Companies are attempting to leverage their existing infrastructures by using a new marketing system (online), in addition to their existing method (catalogs, etc.). The direct marketing model takes place without intermediaries between manufacturers and buyers.

Electronic malls (e-malls) are combinations of several online merchants in one location. Some malls are just an aggregation of merchants, while other malls provide integrated services (like a single checkout for many merchants).

Online travel services provide the benefits of large amounts of free information, 24/7 availability and the potential for significant reductions in price. Intelligent agents could provide a service to travel customers by providing buyer-seller negotiations. Future applications would allow greater information flow for better pricing and decision making.

The electronic job market is driven by the volatile nature of the employment market itself and the constant change in available positions and applicants.

The major advantages of online stock trading are its ease-of-use, access to large amounts of information, convenience, and in many cases reduced costs. In addition to risks of trading stocks in general, trading stocks online can have the risks of delayed information as well as the relative ease of trading (increasing the amount of trading overall).

Some of the implementation issues of online financial services include: securing financial transactions, using the bank intranet, using imaging systems, differential pricing of online/offline services and potential risks.

The use of EC and IT can create changes in a traditional supply chain. These changes can remove existing players (disintermediation) and can bring them back with different roles and functions (reintermediation). Cybermediation uses intelligent agents while hypermediation uses intensive intermediation (both human and electronic) at all stages of the value chain.

Key Terms

BAM 570 E-Commerce Management

The key terms listed below are terms you should be familiar with. Write your definition below each item. Check your answers at the end of this chapter.

Channel conflict:

Cybermediation (electronic intermediation):

Disintermediation:

Electronic banking (e-banking):

Electronic retailing:

E-grocer:

On-demand delivery service:

Reintermediation:

Shopping portals:

Shopping robots (shopping agents or shopbots):

Summary

BAM 570 E-Commerce Management

E-tailing, the online selling of products and services, is growing rapidly. Computers, software and electronics are the major items sold online. Books, CDs, toys, office supplies, and other standard commodities also sell well. More successful are services sold online, such as airline tickets and travel services, stocks and insurance.

The major e-tailing business models can be classified by distribution channel—a manufacturer or mail-order company selling direct to consumers, pure-play (virtual) e-tailing, a click-and-mortar strategy with both online and traditional channels and online malls that provide either referring directories or shared services.

Most services available through a physical travel agency also are available online. In addition, customers get much more information much more quickly through online resources. Customers can even receive bids from travel providers.

The online job market is growing rapidly with thousands and thousands of jobs matched with job seekers each year. The major benefits of online job markets are the ability to reach a large number of job seekers at low cost, to provide detailed information online, to take applications and even to conduct tests. Also, using intelligent agents, resumes can be checked and matches made more quickly.

The online real estate market is basically supporting rather than replacing existing agents. In addition, both buyers and sellers can save time and effort in the electronic market.

One of the fastest growing online businesses is the online trading of securities. It is inexpensive, convenient and supported by a tremendous amount of financial and advisory information.

Branch banking is on the decline due to less expensive, more convenient online banking. The world is moving toward online banking; today, most routine banking services can be done from home. Banks can reach customers in remote places and customers can bank with faraway institutions. This makes the financial markets more efficient.

On-demand delivery service is needed when items are perishable or when delivering medicine, express documents or urgently needed supplies.

Anything that can be digitized can be successfully delivered online. Delivery of digital products such as music, software, movies and other entertainment online has been a success.

Self Test

BAM 570 E-Commerce Management

Multiple Choice Questions (Circle the correct answer)

1) According to Internet Retailer (2007), approximately ___________ percent of adult U.S. Internet users shop online or research offline sales online.

a. 25 b. 45 c. 65 d. 85

2) All of the following describe retailing except:

a. a retailer is a sales intermediary. b. many manufacturers sell directly to consumers and through wholesalers and retailers. c. e-tailing makes it easier for a manufacturer to sell directly to customers by cutting out the intermediary. d. companies that produce a large number of products, such as Procter & Gamble, do not need retailers for efficient distribution.

3) What is the primary advantage of catalog sales?

a. It eliminates the constraints of space and time. b. Customers prefer catalog shopping to e-tailing. c. Catalogs increase interest in products that are then bought online. d. Products and services can both be sold via catalogs.

4) Dell’s distribution strategy is best described as ____________.

a. a brick-and-mortar strategy b. a shared service mall strategy c. a click-and-mortar strategy d. direct marketing from a manufacturer

5) A company that creates and manages many-to-many markets is called a ____________.

a. market maker b. transaction broker c. content disseminator d. viral marketer

Self Test

BAM 570 E-Commerce Management

6) Which is not a characteristic of social computing technologies?

a. Social computing is increasingly playing a larger role in corporate online strategy. b. Social computing has shifted online travel from passive selling to active customer engagement. c. Companies that implement social computing technologies on their own Websites should view it primarily as a sales tool and less as supporting business goals. d. Social computing plays an important role by providing more correct and relevant information.

7) One of the characteristics of Web 2.0 in the travel industry is ____________.

a. standardization b. segmentation c. personalization. d. intermediation

8) Which of the following is not a characteristic of e-banking?

a. Saves users time and money b. Is more expensive for banks c. Is becoming an enabling feature of business growth in the developing world d. Is increasing peer-to-peer (P2P) online lending

9) Security for online bank transactions include all of the following except:

a. firewalls. b. SSL encryption. c. virtual biometrics. d. digital certificates.

10) Gateways to storefronts and e-malls are referred to as ____________.

a. shopping portals b. shopbots c. shopping browsers d. intelligent search engines

Critical Analysis

Critical Analysis / Case Study Problems

BAM 570 E-Commerce Management

1. Consider the importance of comparison tools, product reviews, and customer ratings in online shopping.

2. Detail the benefits of build-to-order to buyers and sellers. Are there any disadvantages?

3. Why are online travel services such a popular Internet application? Why do so many Websites provide free travel information?

Answer Keys

BAM 570 E-Commerce Management

Key Term Definitions

Channel conflict: Situation in which an online marketing channel upsets the traditional channels due to real or perceived damage from competition.

Cybermediation (electronic intermediation): The use of software (intelligent) agents to facilitate intermediation.

Disintermediation: The removal of organizations or business process layers responsible for certain intermediary steps in a given supply chain.

Electronic banking (e-banking): Various banking activities conducted from home or the road using an Internet connection; also known as cyberbanking, virtual banking, online banking, and home banking.

Electronic retailing: Retailing conducted online, over the Internet.

E-grocer: A grocer that takes orders online and provides deliveries on a daily or other regular schedule or within a very short period of time.

On-demand delivery service: Express delivery made fairly quickly after an online order is received.

Reintermediation: The process whereby intermediaries (either new ones or those that had been disintermediated) take on new intermediary roles.

Shopping portals: Gateways to e-storefronts and e-malls; may be comprehensive or niche oriented.

Shopping robots (shopping agents or shopbots): Tools that scout the Web on behalf of consumers who specify search criteria.

Answer Keys

BAM 570 E-Commerce Management

Answers to Self Test

1) b

2) d

3) a

4) d

5) a

6) c

7) c

8) b

9) c

10) a

Solutions Guide

Critical Analysis / Case Study Problems - Suggested Solutions

BAM 570 E-Commerce Management

1. Consider the importance of comparison tools, product reviews, and customer ratings in online shopping.

Shopping aides provide a variety of advantages to the customer. The greatest advantage is the ability to find a variety of products quickly and easily, and compare their attributes and prices. Student answers will vary on whether or not vendors should provide comparison tools on their site. Comparison tools would make vendors more competitive if others in the market are already doing so, but by placing comparison tools on their site they are creating an environment where cost may be the primary decision criteria.

2. Detail the benefits of build-to-order to buyers and sellers. Are there any disadvantages?

Build-to-order provides the customer with the advantage of being able to select the exact good that they desire. Merchants are able to meet their customers’ exact needs and may not need to carry any inventory. The possible disadvantages would include: increased time to delivery due to manufacturing time, possible necessity to carry a wide variety of components for manufacture, and possible higher prices for customized goods.

3. Why are online travel services such a popular Internet application? Why do so many Websites provide free travel information?

Online travel services are very popular because they allow customers to perform a function traditionally performed by an intermediary, while generating a cost savings. Many of the services are relatively easy to provide and easy for the customer to use. Many Web sites provide this information as an added benefit and incentive for users to visit their Web sites.

Notes

BAM 570 E-Commerce Management

Unit 1 Examination Instructions

The Unit Examination

The Unit Examination contains 25 multiple choice questions, as well as a writing assignment.

Your grade on the examination will be determined by the percentage of correct answers. The University utilizes the following grading system:

A = 90% – 100% correct B = 80% – 89% correct C = 70% – 79% correct D = 60% – 69% correct F = 59% and below correct

4 grade points 3 grade points 2 grade points 1 grade point 0 grade points

Completing Unit One Examination

Before beginning your examination, we recommend that you thoroughly review the textbook chapters and other materials covered in each Unit and follow the suggestions in the “Mastering the Course Content” section of the course Syllabus.

This Unit Examination consists of objective test questions as well as a comprehensive writing assignment selected to reflect the Learning Objectives identified in each chapter covered so far in your textbook.

Additional detailed information on completing the examination, writing standards and how to submit your completed examination may be found in the Syllabus for this course.

BAM 570 E-Commerce Management

Unit 1 Examination

BAM 570 E-Commerce Management

Multiple Choice Questions (Enter your answers on the enclosed answer sheet)

1) The 2008 Olympics in Beijing was the most digital Olympics to date for each of the following reasons except:

a. many of the tickets were purchased online by people worldwide, using Beijing Gehue Ticketmaster, in what is called business-to-business (B2B) e-commerce. b. the International Olympic Committee launched a YouTube channel to broadcast clips that were accessible in many developing countries. c. millions watched the Olympics through online videos and Internet-enabled cell phones and other mobile devices. d. global Positioning Systems (GPS) were used to track the position of sailing and rowing boats.

2) EC can take several forms depending on the degree of digitization of the following three dimensions:

3) Boeing designing a product together with one of its business partners is an example of this type of interaction.

a. Collaborative commerce b. Nonbusiness EC c. B2B3C d. B2B2C

4) Many companies employ a(n) ________, which is a gateway for customers, employees and partners to reach corporate information and to communicate with the company.

a. corporate portal b. intranet c. extranet d. social network

5) The digital enterprise shifts the focus from managing individual information resources such as devices, applications, and data to ________ that define the business and ultimately deliver value to customers and end users.

a. developing models b. orchestrating the services and workflows c. organizing supply chains d. transforming revenue models

Unit 1 Examination

BAM 570 E-Commerce Management

6) According to the Business Environment and Performance Impact Model, ________ provide support to organizations’ activities and to actual performance, countering business pressures.

a. EC and IT b. missions and strategies c. core competencies and critical response activities d. markets and government

7) All of the following are benefits of EC to society except:

a. more public services. b. closing the digital divide. c. fewer permits and less tax. d. improve homeland security.

8) Which of the following is a technological limitation of EC?

9) All of the following are non-technological limitations of EC except:

a. software development tools are still evolving. b. lack of trust in EC and in unknown sellers hinders buying. c. people do not yet sufficiently trust paperless, faceless transactions. d. online fraud is increasing.

10) Which of the following is not one of the EC trends?

a. EC topics have been integrated into all functional fields. b. EC is penetrating more and more business areas, services and governments. c. EC applications frequently cross departmental and organizational boundaries. d. National and international government regulations of EC have been resolved.

11) The success of the entrepreneurial company JetPens was due to keeping costs low by each of the following methods except:

a. using open source free software. b. advertising via e-mail. c. giving away free samples via social networks. d. using smart key words to rank high with search engines.

Unit 1 Examination

BAM 570 E-Commerce Management

12) Eastern Mountain Sports introduced ____________ tools in order to increase collaboration, information sharing, and communication among stores and their employees, suppliers, and customers.

a. business intelligence b. B2B c. B2C d. Web 2.0

13) Online markets that are owned and operated by a single company and that are either sell-side or buy-side are known as ____________.

a. private e-marketplaces b. commercial portals c. e-malls d. B2B marketplaces

14) Employees may waste time trying to find relevant and accurate information if they have to access multiple information systems. The best solution to this problem is the use of ________.

a. Web portals b. intermediaries c. browsers d. intranets

15) A type of broker that helps consumers compare different stores is a ________.

a. remediator b. search engine c. comparison agent d. virtual mall

16) E-catalogs have several common characteristics. Which of the following is not a characteristic of e-catalogs?

a. Easy to create without advanced information technology b. Easy to update product information c. Easy to customize d. Good search and comparison capabilities

Unit 1 Examination

BAM 570 E-Commerce Management

17) The most common and traditional form of auctions in which one seller entertains bids from many buyers is referred to as ___________.

a. forward auctions b. reverse auctions c. bidding auction system d. tendering system

18) What is a benefit of e-auctions to the sellers? a. anonymity b. optimal price determined by the market c. lack of differentiation d. convenience of bidding anywhere and any time

19) ___________ provides customers with exactly what they want, when and where they want it. Effective communication between the supply chain and the factory floor is needed to make it happen.

a. Build-to-order manufacturing b. Demand-driven manufacturing c. Real-time manufacturing d. Virtual manufacturing

20) Which of the following is a characteristic of e-tailing?

a. Competition is local. b. Customer relations are less stable due to anonymous contacts. c. Price changes are expensive, but can be done at anytime. d. Fewer resources are needed to increase customer loyalty.

21) A marketer that uses e-mail to advertise to potential customers is called a ____________.

a. market maker b. transaction broker c. content disseminator d. viral marketer

Unit 1 Examination

BAM 570 E-Commerce Management

22) In an e-market, Federal Express and PayPal are examples of ____________.

a. intermediaries b. service providers c. content disseminators d. viral marketers

23) Compared to the traditional job market, the online job market ____________.

a. has a shorter life cycle b. is usually specialized and local in scope c. tends to be less reliable d. tends to be much less expensive

24) Gateways to storefronts and e-malls are referred to as ____________.

a. shopping portals b. shopbots c. shopping browsers d. intelligent search engines

25) Software tools that scout the Web for stores that sell similar items at low prices are called ____________.

a. shopping portals b. shopbots c. shopping browsers d. intelligent search engines

Unit 1 Examination

BAM 570 E-Commerce Management

Written Assignment for Unit One

• Include your name, student number, course number, course title and unit number on each page of your written assignment (this is for your protection in case your materials become separated).

• Begin each written assignment by identifying the question number you are answering followed by the actual question itself (in bold type).

• Use a standard essay format for responses to all questions (i.e. an introduction, middle paragraphs and conclusion).

• Responses must be submitted as a MS Word Document only, typed double-spaced, using a standard font (i.e. Times New Roman) and 12 point type size.

Word count is NOT one of the criteria that is used in assigning points to written assignments. However, students who are successful in earning the maximum number of points tend to submit written assignments that fall in the following ranges:

Undergraduate courses: 350 - 500 words or 1 - 2 pages. Graduate courses: 500 - 750 words or 2 - 3 pages. Doctoral courses: 750 - 1000 words or 4 - 5 pages.

Plagiarism

Please answer ONE of the following:

1) Compare the advantages of online job markets over traditional job markets on five characteristics.

2) Assess enterprise social networks. How can companies use Web 2.0 tools to offer customers more ways to engage and interact on their Websites?

3) Distinguish and briefly discuss the roles and value of intermediaries in e-marketplaces.

You Can Do It

BAM 570 E-Commerce Management

You have just completed Unit 1 of this course.

You are off to a great start! Keep up the good work!

Objectives

BAM 570 E-Commerce Management

Chapter Four Consumer Behavior, Internet Marketing and Advertising

Learning Objectives

Upon successful completion of this chapter, you should be able to:

1. Distinguish the factors that influence consumer behavior online.

2. Assess segmentation and how companies are building one- to-one relationships with customers.

3. Explore how consumer behavior can be analyzed for creating personalized services.

4. Investigate the issues of e-loyalty and e-trust in electronic commerce (EC).

5. Consider the objectives of Web advertising and its characteristics.

6. Evaluate various online advertising strategies and types of promotions.

7. Relate Web 2.0 and social networks to Internet market research and advertising.

Instructions to Students • Read pages 142 – 192 of your textbook

• Reference: Electronic Commerce: A Managerial Perspective by Efraim Turban, David King, Jae Lee, Ting-Peng Liang, Deborrah Turban, 2010

Overview

BAM 570 E-Commerce Management

There are a number of personal characteristics that affect buying behavior. Some of these characteristics include age, gender, ethnicity, education, lifestyle, psychology, knowledge, values and personality. The variables of the purchasing environment include social variables, cultural/ community variables and other variables.

Consumers can play one or several of the following roles in the consumer decision-making process: initiator, influencer, decider, buyer and user.

Personalization of goods and services for unique individuals requires information from the individual and the ability to match that information to appropriate products. There are several different ways to obtain information from individuals. These methods include soliciting the information from the individual directly, using cookies or other methods to observe online behavior, and performing market research or extrapolating from previous purchasing patterns. Once a firm has information about an individual’s preferences, they can then use a software system to match those preferences to available products and services.

Online market research is very similar to the research that would be done offline. Online market research is conducted online, and the Internet can make the process quicker and easier. Researchers go through the same steps online in determining what needs to be researched and validating results. Researchers can gain access to a large variety of secondary research available online. The major methods include Web surveys, focus groups, direct feedback, customer scenarios, customer tracking and analysis of clickstream data.

Advertisers are looking to the Web because it is a viable advertising medium. Individuals may be moving away from other advertising mediums and to the Internet. Additionally, the demographics of individuals who use the Internet are generally more affluent then the population as a whole, making an attractive population to advertise to. Web ads also have the benefit of lower cost, increased richness of format and the ability to personalize.

Key Terms

BAM 570 E-Commerce Management

The key terms listed below are terms you should be familiar with. Write your definition below each item. Check your answers at the end of this chapter.

One-to-one marketing (relationship marketing):

Clickstream behavior:

Collaborative filtering:

Conversion rate:

Cookie:

Personalization:

Keyword banners:

Market segmentation:

Merchant brokering:

Product brokering:

User profile:

Web bugs:

Summary

BAM 570 E-Commerce Management

Consumer behavior in EC is similar to that of any consumer behavior, but it has some unique features. It is described in a stimuli-based decision model that is influenced by independent variables (personal characteristics and environmental characteristics). The model also contains a significant vendor-controlled component that includes both market stimuli and EC systems (logistics, technology, and customer service). All of these characteristics and systems interact to influence the decision-making process and produce an eventual buyer decision.

The goal of marketing research efforts is to understand the consumers’ online decision-making process and formulate an appropriate strategy to influence their behavior.

Customers can switch loyalty online easily and quickly, therefore, enhancing e-loyalty (e.g., through e-loyalty programs) is a must. Similarly, trust is a critical success factor that must be nourished.

Web advertising attempts to attract surfers to an advertiser’s site. Once at the advertiser’s site, consumers can receive information, interact with the seller, and in many cases, immediately place an order. With Web advertising, ads can be customized to fit groups of people with similar interests or even individuals.

Banners are the most popular online advertising method. Other frequently used methods are pop-ups and similar ads (including interstitials), e-mail (including e-mail to mobile devices), classified ads, registration of URLs with search engines and advertising in chat rooms.

Intelligent agents can gather and interpret data about consumer purchasing behavior. Advanced agents can even learn about customer behavior and needs by observing their Web movements. Agents can facilitate or support all aspects of the purchasing process, including product brokering, merchant brokering, product comparison, buyer-seller negotiation, purchase and delivery and after-sale customer service. Character-based interactive agents such as avatars and chatterbots “put a face” on the computing experience, making it more natural.

Self Test

BAM 570 E-Commerce Management

Multiple Choice Questions (Circle the correct answer)

1) By increasing customer loyalty, EC companies can achieve each of the following benefits except:

a. lower marketing and advertising costs. b. higher warranty claims costs. c. lower transaction costs. d. lower resistance to competitors.

2) What has been the impact of the introduction of EC on customer loyalty in general?

a. Loyalty has decreased because of customers’ increased ability to shop, compare prices and features, and change vendors. b. Loyalty has increased because of targeted relationship marketing. c. There has been little change in loyalty because the impacts have cancelled each other out. d. It is not known whether loyalty has increased or decreased.

3) All of the following are correct about market research methods except:

a. It is important first to understand how groups of consumers are classified or segmented. b. Markets can be segmented to increase the percentage of responses and to formulate effective marketing strategies that appeal to specific consumer groups. c. Direct mail marketing methods are usually cost-effective. d. Market segmentation is done with the aid of tools such as data modeling and data warehousing.

4) Once a company knows a consumer’s preferences, the company can predict, without asking the consumer directly, what other products or services that consumer might enjoy through:

a. active web bugs. b. spyware. c. collaborative filtering. d. personalization.

5) Which of the following is not a specific method for collecting online data?

a. Phone surveys to learn if there are too many products for the customer to look through b. E-mail communication with individual customers c. Moderated focus groups conducted in chat rooms d. Tracking customers’ movements on the Web

Self Test

BAM 570 E-Commerce Management

6) What is the key problem that biometric marketing is intended to solve?

a. Knowing the identity of the actual shopper b. Improving accuracy of the shopper’s data c. Increasing the speed of order processing d. Creating a loyalty program

7) ___________ is an advertising network that a B2B company can use as part of its advertising strategy to reach new customers.

a. Amazon.com b. BBB Online c. DoubleClick d. WebMonkey

8) All of the following describe click-through rate except:

a. it is the ratio between the number of clicks on a banner ad and the number of times it is seen by viewers. b. it is a request for data from a Web page or file. c. it measures the success of a banner in attracting visitors to click on the ad. d. it may be less than or equal to the conversion rate.

9) Word-of-mouth marketing by which customers promote a product or service by telling others via social networks or other means is referred to as:

a. affiliate marketing. b. viral marketing. c. target marketing. d. search engine marketing.

10) One of the major challenges of one-to-one advertising is ________, or the flooding of users with junk e-mail, banners, pop-ups, and so on.

a. interstitial ads b. permission marketing c. spamming d. behavioral targeting

Critical Analysis

Critical Analysis / Case Study Problems

BAM 570 E-Commerce Management

1. Assess how market research is done online and the major market research methods.

2. Create an inventory of the reasons for the growth in Web advertising.

3. Evaluate banner swapping and banner exchanges.

Answer Keys

BAM 570 E-Commerce Management

Key Term Definitions

course title

One-to-one marketing (relationship marketing): Marketing that treats each customer in a unique way.

Clickstream behavior: Customer movements on the Internet.

Collaborative filtering: A personalization method that uses customer data to predict, based on formulas derived from behavioral sciences, what other products or services a customer may enjoy; predictions can be extended to other customers with similar profiles.

Conversion rate: The percentage of visitors who actually make a purchase.

Cookie: A data file that is placed on a user’s hard drive by a Web server, frequently without disclosure or the user’s consent, that collects information about the user’s activities at a site.

Personalization: The matching of services, products, and advertising content with individual consumers and their preferences.

Keyword banners: Banner ads that appear when a predetermined word is queried from a search engine.

Market segmentation: The process of dividing a consumer market into logical groups for conducting marketing research, advertising, and sales.

Merchant brokering: Deciding from whom (from what merchant) to buy a product.

Product brokering: Deciding what product to buy.

User profile: The requirements, preferences, behaviors, and demographic traits of a particular customer.

Web bugs: Tiny graphics files embedded on e-mail messages and in Websites that transmit information about users and their movements to a Web server.

Answer Keys

BAM 570 E-Commerce Management

Answers to Self Test

1) b

2) a

3) c

4) c

5) a

6) a

7) c

8) b

9) b

10) c

Solutions Guide

Critical Analysis / Case Study Problems - Suggested Solutions

BAM 570 E-Commerce Management

1. Assess how market research is done online and the major market research methods.

Online market research is very similar to the research that would be done off-line. Online market research is conducted online, and the Internet can make the process quicker and easier. Researchers go through the same steps online in determining what needs to be researched and validating results. Researchers can gain access to a large variety of secondary research available online. The major methods include Web surveys, focus groups, direct feedback, customer scenarios, customer tracking, and analysis of clickstream data.

2. Create an inventory of the reasons for the growth in Web advertising.

3. Evaluate banner swapping and banner exchanges.

Banner swapping is an agreement between two companies to display the other’s banner ad on its Website. Banner exchanges are markets in which companies can trade or exchange placement of banner ads on each other’s Websites.

Notes

BAM 570 E-Commerce Management

Objectives

BAM 570 E-Commerce Management

Instructions to Students

Chapter Five B2B E-Commerce

Learning Objectives

Upon successful completion of this chapter, you should be able to:

1. Analyze the B2B field and the major types of B2B models.

2. Characterize the sell-side marketplace, including auctions.

3. Detail the buy-side marketplace and e-procurement.

4. Examine how reverse auctions work in B2B.

5. Assess exchanges and describe their major types.

6. Critique partner relationship management (PRM).

7. Hypothesize how B2B can benefit from social networking and Web 2.0.

8. Consider Internet marketing in B2B, including organizational buyer behavior.

• Read pages 193 – 242 of your textbook

• Reference: Electronic Commerce: A Managerial Perspective by Efraim Turban, David King, Jae Lee, Ting-Peng Liang, Deborrah Turban, 2010

Overview

BAM 570 E-Commerce Management

Business-to-business e-commerce refers to transactions between businesses conducted electronically over the Internet, extranets, intranets or private networks. Spot buying is the purchase of goods and services as they are needed, usually at prevailing market prices. In contrast, strategic sourcing is the purchase of goods and services involving long-term contracts that are usually based on private negotiations. Direct materials are the materials that are used in the creation of a product whereas indirect materials are used to support that production. Vertical markets are concentrated in a specific industry whereas horizontal markets concentrate on a product or service that is used across several industries.

The major types of B2B sell-side transactions include selling from electronic catalogs, selling through forward auctions and one-to-one selling. In some cases, firms may use an intermediary to provide some or all of their sell-side transaction systems. When intermediaries are used, it is generally in the format of an electronic marketplace. The larger the firm, the more likely it is to use a private, and not a third-party intermediary system.

The four major benefits of using B2B auctions for selling include: revenue generation, cost savings, increased page views and member acquisition/retention.

E-procurement is the electronic acquisition of goods and services for a business. E-procurement attempts to achieve the following goals: increased productivity, lower purchase prices, improved information flow, minimized maverick purchasing, improved payment processes, faster purchasing, reduced processing costs, and finding new suppliers/vendors.

Under a manual tendering system, buyers create descriptions of the products that they would like to purchase and then send out RFQs to potential bidders. Potential bidders review the information, ask questions and submit bids. Buyers then evaluate the bids and select a bidder.

An internal marketplace is an aggregation of several different suppliers’ catalogs in one location. The major benefits of this type of aggregated catalog system involve the ease and speed of the resulting ordering process.

Key Terms

BAM 570 E-Commerce Management

The key terms listed below are terms you should be familiar with. Write your definition below each item. Check your answers at the end of this chapter.

Buy-side e-marketplace:

Company-centric EC:

Desktop purchasing:

E-procurement:

Internal procurement marketplace:

Group purchasing:

Maverick buying:

Procurement management:

Public e-marketplaces:

Sell-side e-marketplace:

Spot buying:

Summary

BAM 570 E-Commerce Management

The B2B field is very diversified. It can be divided into the following segments: sell-side marketplaces (one seller to many buyers), buy-side marketplaces (one buyer from many sellers), and trading exchanges (many sellers to many buyers). Intermediaries play an important role in some B2B models.

Sell-side B2B EC is the online direct sale by one seller (a manufacturer or an intermediary) to many buyers. The major technology used is electronic catalogs which allow for efficient customization, configuration and purchase by customers.

Today, companies are moving to e-procurement to expedite purchasing, save on item and administrative costs and gain better control over the purchasing process. Major procurement methods are reverse auctions (bidding system), buying from storefronts and catalogs, negotiations, buying from an intermediary that aggregates sellers’ catalogs, internal marketplaces and group purchasing, desktop purchasing, buying in exchanges or industrial malls and e-bartering. E-procurement offers the opportunity to achieve significant cost and time savings.

A reverse auction is a tendering system used by buyers to collect bids electronically from suppliers. Auctions can be done on a company’s Website or on a third-party auction site. Reverse auctions can dramatically lower buyers’ costs. Both product costs and the time and cost of the tendering process.

Increasing the exposure and the bargaining power of companies can be done by aggregating either the buyers or the sellers. Aggregating suppliers’ catalogs into an internal marketplace gives buying companies better control of purchasing costs. Desktop purchasing by end users expedites and simplifies the process of buying inexpensive products or services. Buying from e-distributors and at exchanges also is popular, as are auctions and bartering.

To implement B2B, an organization will need a comprehensive set of hardware and software that includes networks and protocols, multiple servers, application software, and security. Of special utility are extranets and EDI (both traditional and Web based).

Self Test

BAM 570 E-Commerce Management

Multiple Choice Questions (Circle the correct answer)

1) B2B transactions that involve communication, design, planning, information sharing and activities beyond financial transactions among business partners is referred to as ____________.

a. exchanges b. collaborative commerce c. trading communities d. public marketplaces

2) The purchase of goods and services as they are needed, usually at prevailing market prices, is referred to as ____________.

a. direct materials b. consolidation c. spot buying d. strategic sourcing

3) What are the two types of materials and supplies that are traded in B2B?

a. Digital and physical b. Direct and indirect c. Horizontal and vertical d. Commodities and nonproduction

4) The ________ consists of a number of interrelated subprocesses that extend from the acquisition of materials from suppliers to packaging it and moving it to distributors and retailers.

a. supply chain b. vertical market c. horizontal marketplace d. production chain

5) EC companies will usually separate their B2C orders from their B2B orders because B2C and B2B orders have different _____________.

a. buying and delivery processes b. accounting and financial processes c. marketing processes d. order-fulfillment processes and pricing

Self Test

BAM 570 E-Commerce Management

6) By using the Internet and automatic-response software agents, GE reduced the cost of customer service calls from $5.00 per call when done by phone to ________ per electronically answered call.

a. $2.50 b. $1.00 c. $0.20 d. $0.05

7) Several benefits of Microsoft’s ________ are that distributors can check inventory, make transactions, and look up the status of their orders, significantly reducing the number of phone calls, e-mails, and incorrect product shipments.

a. extranet-based order-entry tools b. electronic data interchanges c. customized catalogs d. auto-responders

8) Benefits of using a third-party hosting company for conducting B2B auctions instead of developing an auction site in-house include all of the following except:

a. no hiring costs. b. no redeployment of corporate resources. c. time-to-market of several weeks. d. no need for additional resources such as hardware, bandwidth, or IT personnel.

9) An example of a successful aggregation of suppliers’ catalogs is that of ________, which aggregates more than 10,000 items from the catalogs of approved suppliers into an internal electronic catalog.

a. MasterCard International b. Amazon.com c. Google d. Priceline.com

10) Denver Boards, a B2B manufacturer of snowboard equipment, can reach and target new retail customers in order to grow its online business by ____________.

a. hiring an affiliation service to drive traffic to its Website b. reviewing POS data c. mining data d. advertising in traditional media

Critical Analysis

Critical Analysis / Case Study Problems

BAM 570 E-Commerce Management

1. Assess the following: spot buying versus strategic sourcing, direct materials versus indirect materials, and vertical markets versus horizontal markets.

2. Provide reasoning for the logic of group purchasing and how it is organized.

3. Consider the advantages of selling through online auctions over selling from catalogs. What are the disadvantages?

Answer Keys

BAM 570 E-Commerce Management

Key Term Definitions

Buy-side e-marketplace: A corporate-based acquisition site that uses reverse auctions, negotiations, group purchasing, or any other e-procurement method.

Company-centric EC: E-commerce that focuses on a single company’s buying needs (many-to-one, or buy-side) or selling needs (one-to-many, or sell-side).

E-procurement: The electronic acquisition of goods and services for organizations.

E-sourcing: The process and tools that electronically enable any activity in the sourcing process, such as quotation/tender submittance and response, e-auctions, online negotiations, and spending analyses.

Internal procurement marketplace: The aggregated catalogs of all approved suppliers combined into a single internal electronic catalog.

Group purchasing: The aggregation of orders from several buyers into volume purchases so that better prices can be negotiated.

Maverick buying: Unplanned purchases of items needed quickly, often at non-pre-negotiated higher prices.

Procurement management: The coordination of all the activities relating to purchasing goods and services needed to accomplish the mission of an organization.

Public e-marketplaces: Third-party exchanges that are open to all interested parties (sellers and buyers).

Sell-side e-marketplace: A Web-based marketplace in which one company sells to many business buyers from e-catalogs or auctions, frequently over an extranet.

Spot buying: The purchase of goods and services as they are needed, usually at prevailing market prices.

Answer Keys

BAM 570 E-Commerce Management

Answers to Self Test

1) b

2) c

3) b

4) a

5) d

6) c

7) a

8) c

9) a

10) a

Solutions Guide

Critical Analysis / Case Study Problems - Suggested Solutions

BAM 570 E-Commerce Management

1. Assess the following: spot buying versus strategic sourcing, direct materials versus indirect materials, and vertical markets versus horizontal markets.

Spot buying is the purchase of goods and services as they are needed, usually at prevailing market prices. In contrast, strategic sourcing is the purchase of goods and services involving long-term contracts that are usually based on private negotiations. Direct materials are the materials that are used in the creation of a product whereas indirect materials are used to support that production. Vertical markets are concentrated in a specific industry whereas horizontal markets concentrate on a product or service that is used across several industries.

2. Provide reasoning for the logic of group purchasing and how it is organized.

Group purchasing is based on the idea that individual buyers will be able to negotiate a better price on goods and services if they act as a buying group. Group purchasing is organized through internal or external aggregation depending on the size of the firm placing the order. External aggregation is usually organized through a third-party system.

3. Consider the advantages of selling through online auctions over selling from catalogs. What are the disadvantages?

Selling through auctions has several advantages including low overhead and operational costs if a third-party auction is used, the ability to sell one-of-a-kind items easily, the ability to sell at the prevailing market price, and the ability to change products and pricing quickly. Disadvantages might include limited selling times and reduced control over price.

Notes

BAM 570 E-Commerce Management

Objectives

BAM 570 E-Commerce Management

Chapter Six E-Supply Chains, Collaborative Commerce and Corporate Portals

Learning Objectives

Upon successful completion of this chapter, you should be able to:

1. Characterize the e-supply chain and describe its characteristics and components.

2. Outline supply chain problems and their causes.

3. Detail RFID supply chain applications.

4. Evaluate c-commerce and list the major types.

5. Consider integration along the supply chain.

6. Assess corporate portals and their types and roles.

7. Appraise e-collaboration tools such as workflow software and groupware.

8. Determine Collaboration 2.0 technology and tools.

Instructions to Students • Read pages 243 – 293 of your textbook

• Reference: Electronic Commerce: A Managerial Perspective by Efraim Turban, David King, Jae Lee, Ting-Peng Liang, Deborrah Turban, 2010

Overview

BAM 570 E-Commerce Management

The success of many organizations—private, public, and military—depends on their ability to manage the flow of materials, information and money into, within and out of the organization. Such a flow is referred to as a supply chain. Because supply chains may be long and complex and may involve many different business partners, we frequently see problems in the operation of the supply chains. These problems may result in delays, in customer dissatisfaction, in lost sales and in high expenses that result from fixing the problems once they occur. World-class companies, such as Dell, attribute much of their success to effective supply chain management (SCM), which is largely supported by IT and e-commerce technologies.

This chapter focuses on supply chain issues related to e-commerce. In addition, it covers several related topics such as collaboration and integration along the supply chain.

Key Terms

BAM 570 E-Commerce Management

The key terms listed below are terms you should be familiar with. Write your definition below each item. Check your answers at the end of this chapter.

Advanced planning and scheduling (APS) systems:

Bullwhip effect:

Collaborative commerce (c-commerce):

Collaborative planning and forecasting and replenishment (CPFR):

Collaboration hub:

Corporate (enterprise) portal:

Vendor-managed inventory (VMI):

Collaborative planning:

Product lifecycle management (PLM):

Workflow:

Summary

BAM 570 E-Commerce Management

Digitizing and automating the flow of information throughout the supply chain and managing it via the Web results in an entity called the e-supply chain. The major supply chain problems are too large or too small inventories, lack of supplies or products when needed, the need for rush orders, deliveries of wrong materials or to wrong locations and poor customer service.

EC technologies automate and expedite order taking, speed order fulfillment, provide for e-payments, properly control inventories, provide for correct forecasting and thus better scheduling, and improve collaboration among supply chain partners.

Collaborative planning concentrates on demand forecasting and on resource and activity planning along the supply chain. Collaborative planning tries to synchronize partners’ activities. CPFR is a business strategy that attempts to develop standard protocols and procedures for collaboration. Its goal is to improve demand forecasting by collaborative planning in order to ensure delivery of materials when needed.

Integration of various applications within companies and between business partners is critical to the success of companies. To simplify integration, one can use special software as well as employ standards such as XML.

Hundreds of different collaboration tools are available. The major groups of tools are workflow and groupware. In addition, specialized tools ranging from group decision support systems (GDSSs) to devices that facilitate product design are also available.

Self Test

BAM 570 E-Commerce Management

Multiple Choice Questions (Circle the correct answer)

1) For a manufacturer, the supply chain ends ____________.

a. when the supplier delivers raw materials and component parts to the manufacturer b. when the product is used up and disposed of c. when the customer buys the product d. when the customer decides he/she is satisfied with a product

2) The e-SCM process that includes integrated production and distribution processes is _____________.

a. supply chain replenishment b. collaborative planning c. e-procurement d. e-logistics

3) When planning, designing and implementing integrated supply chain operations, management requires a holistic focus that takes into account all of the following primary factors except:

a. strategy, structure, and people. b. location and revenues. c. IT and business processes. d. culture, including performance measurement, monitoring, and incentives.

4) ____________ is a business strategy that enables manufacturers to control and share product- related data as part of product design and development efforts.

a. Advanced planning and scheduling b. Collaborative planning c. Product lifecycle management d. Internal commerce

5) All of the following are true about product lifecycle management (PLM) except:

a. PLM can have significant beneficial impacts in cycle time, design reuse, and engineering. b. The demand for PLM is limited because it does not apply to products that have short life cycles or are complex. c. PLM is a big step for an organization because it requires integrating different processes and systems. d. PLM tools are offered by major IT companies such as SAP and IBM.

Self Test

BAM 570 E-Commerce Management

6) All of the following are types of communication and collaboration done in real time except:

a. blogging. b. webinars. c. instant messaging. d. VoIP.

7) Infrastructure needed for groupware include all of the following except:

a. VoIP. b. intranets. c. extranets. d. the Internet.

8) Mobile support systems include each of the following except:

a. mobile social networking. b. mobile handset. c. mobile VoIP. d. mobile instant messaging.

9) ____________ are required to create a truly collaborative environment, to integrate different applications and for standardizing communication.

a. Web services b. Portals c. Protocols d. Collaborative workflows

10) All of the following apply to instant video except:

a. it evolved from the spread of instant messaging and Internet telephony. b. the idea is for a kind of video chat room that allows users to chat in real time and see the people they are communicating with. c. it is the natural result of wanting to link people via both voice and audio. d. the highest quality approach is to add video cameras to the participants’ computers.

Critical Analysis

Critical Analysis / Case Study Problems

BAM 570 E-Commerce Management

1. Distinguish some major barriers to c-commerce.

2. Assess e-supply chain and discuss its importance in supporting organizational performance.

3. Compare and contrast a commercial portal (such as Yahoo!) with a corporate portal.

Answer Keys

BAM 570 E-Commerce Management

Key Term Definitions

Advanced planning and scheduling (APS) systems: Programs that use algorithms to identify optimal solutions to complex planning problems that are bound by constraints.

Bullwhip effect: Erratic shifts in orders up and down supply chains.

Collaborative commerce (c-commerce): The use of digital technologies that enable companies to collaboratively plan, design, develop, manage, and research products, services, and innovative EC applications.

Collaborative planning and forecasting and replenishment (CPFR): Project in which suppliers and retailers collaborate in their planning and demand forecasting to optimize flow of materials along the supply chain.

Collaboration hub: The central point of control for an e-market. A single c-hub, representing one e-market owner, can host multiple collaboration spaces (c-spaces) in which trading partners use cenablers to exchange data with the c-hub.

Corporate (enterprise) portal: A gateway for entering a corporate Website, enabling communication, collaboration, and access to company information.

Vendor-managed inventory (VMI): The practice of retailers’ making suppliers responsible for determining when to order and how much to order.

Collaborative planning: A business practice that combines the business knowledge and forecasts of multiple players along a supply chain to improve the planning and fulfillment of customer demand.

Product lifecycle management (PLM): Business strategy that enables manufacturers to control and share product-related data as part of product design and development efforts.

Workflow: The movement of information as it flows through the sequence of steps that make up an organization’s work procedures.

Answer Keys

BAM 570 E-Commerce Management

Answers to Self Test

1) b

2) a

3) b

4) c

5) b

6) a

7) a

8) c

9) c

10) d

Solutions Guide

Critical Analysis / Case Study Problems - Suggested Solutions

BAM 570 E-Commerce Management

1. Distinguish some major barriers to c-commerce.

These include technical limitations, security concerns, internal resistance, and lack of internal skills.

2. Assess e-supply chain and discuss its importance in supporting organizational performance.

An e-supply chain is a supply chain that is managed electronically, usually with Web technologies. It is more advanced than an IT enabled supply chain that may only use technology in certain points of the chain, as opposed to the entire chain. E-supply chains allow for more efficient processes and expanded communication and collaboration. In many cases they result in decreased delays, increased information flow, better planning, and lower costs.

3. Compare and contrast a commercial portal (such as Yahoo!) with a corporate portal.

Both Web sites provide a variety of information and a variety of types of potential learning and interaction. An Internet portal such as Yahoo! is horizontal, providing a variety of different types of information about various topics. A corporate portal is vertical, providing information only about the company.

Notes

BAM 570 E-Commerce Management

Unit 2 Examination Instructions

The Unit Examination

The Unit Examination contains 25 multiple choice questions, as well as a writing assignment.

Your grade on the examination will be determined by the percentage of correct answers. The University utilizes the following grading system:

A = 90% – 100% correct B = 80% – 89% correct C = 70% – 79% correct D = 60% – 69% correct F = 59% and below correct

4 grade points 3 grade points 2 grade points 1 grade point 0 grade points

Completing Unit Two Examination

Additional detailed information on completing the examination, writing standards and how to submit your completed examination may be found in the Syllabus for this course.

BAM 570 E-Commerce Management

Unit 2 Examination

BAM 570 E-Commerce Management

Multiple Choice Questions (Enter your answers on the enclosed answer sheet)

1) Paws ‘n Tails is an online pet shop that wants to influence what customers buy and build effective customer relationships and loyalty. What is the key to influencing behavior and building these relationships?

a. Understanding consumer online behavior and then influencing it through advertising and promotions b. Understanding competitors’ pricing strategy and then undercutting it c. Identifying the wants and needs of major customer segments d. Suggesting as many products as possible to online shoppers as soon as they visit the EC site

2) A(n) _____________ is someone whose advice or view carries some weight in making a final purchasing decision.

a. initiator b. influencer c. decider d. buyer

3) The use of cookies ______________.

a. is one of the most controversial issues in EC b. has not helped Internet marketers target their ads c. is a widely used method for mass marketing d. is being replaced by adware and spyware programs

4) Once a company knows a consumer’s preferences, the company can predict, without asking the consumer directly, what other products or services that consumer might enjoy through ______________.

a. active web bugs b. spyware c. collaborative filtering d. personalization

5) Which of the following is not a specific method for collecting online data?

Unit 2 Examination

BAM 570 E-Commerce Management

6) Two key factors limiting the use of personalization to more precisely target marketing efforts to individual customers are _____________.

a. matching profiles with product offerings and delivering those offerings b. communication costs and filtering costs c. privacy and trust issues d. lack of customer loyalty and service customization costs

7) Which of the following statements about Web mining is false?

a. Web mining refers to the use of data mining techniques for discovering and extracting information from Web documents. b. Web mining explores both Web content and Web usage. c. Web mining uses customer data to infer or predict customer interest in other products or services. d. Usage analysis is derived from clickstream data.

8) ____________ is an advertising network that a B2B company can use as part of its advertising strategy to reach new customers.

a. Amazon.com b. BBB Online c. DoubleClick d. WebMonkey

9) The popularity of Apple’s iPhone and Application Store has made _____________ important to advertisers, who see social networking widgets, restaurant locators, mobile games, and other applications as prime targets.

a. stickiness b. direct marketing c. mobile advertising d. banner ads

10) Banner advertising on Websites helps trigger a realization that there is a gap between reality and a desired state, which occurs in the _____________ stage of the EC purchase decision-making process.

a. need identification or recognition b. information search c. evaluation d. product or merchant brokering

Unit 2 Examination

BAM 570 E-Commerce Management

11) As the volume of customers, products, vendors, and information increases, it becomes uneconomical or impossible for customers to consider all relevant information and available products/services. The practical solution to handling such information overload is ______________.

a. to use permission marketing b. to use software or intelligent agents c. to increase the use of ad agencies d. to design Websites with minimal content

12) Portsmouth Hospitals NHS Trust, which provided health-care services for almost 1 million people in the United Kingdom, cut back-office purchasing costs by ______________.

a. using online reverse auctions to purchase from suppliers at the the lowest mutually acceptable purchase price b. implementing online catalogs c. buying via its intranet d. using collaborative commerce

13) B2B transactions that involve communication, design, planning, information sharing, and activities beyond financial transactions among business partners is referred to as _______________.

a. exchanges b. collaborative commerce c. trading communities d. public marketplaces

14) The ________ consists of a number of interrelated subprocesses that extend from the acquisition of materials from suppliers to packaging it and moving it to distributors and retailers.

a. horizontal marketplace b. vertical market c. supply chain d. production chain

15) Which of the following is not one of the major benefits of B2B for both buyers and sellers?

a. Expedites processing and reduces cycle time b. Reduces procurement costs c. Enables customized online catalogs with different prices for different customers d. Increases opportunities for collaboration

Unit 2 Examination

BAM 570 E-Commerce Management

16) All are benefits of B2B except:

a. creates new sales or purchase opportunities. b. eliminates paper and reduces administrative costs. c. increases channel conflict. d. lowers search costs and time for buyers to find products and vendors.

17) EC companies will usually separate their B2C orders from their B2B orders because B2C and B2B orders have different _____________.

a. buying and delivery processes. b. accounting and financial processes. c. marketing processes. d. order-fulfillment processes and pricing.

18) A company’s acquisition Website that uses e-procurement methods such as reverse auctions, negotiations, or group purchasing to overcome the manual searching of e-stores is referred to as _____________.

a. desktop procurement method b. buy-side e-marketplace c. an intermediary d. aggregated catalog

19) Denver Boards, a B2B manufacturer of snowboard equipment, can reach and target new retail customers in order to grow its online business by ______________.

a. hiring an affiliation service to drive traffic to its Website. b. reviewing POS data. c. mining data. d. advertising in traditional media.

20) A company’s internal operations and its relationships with suppliers and other business partners are frequently _____________.

a. as complex as customer-facing applications such as taking an order online. b. much more complex than customer-facing applications such as taking an order online. c. much less complex than customer-facing applications such as taking an order online. d. replaced by customer-facing applications.

Unit 2 Examination

BAM 570 E-Commerce Management

21) The last fifteen orders from a manufacturer to its suppliers range from $100,000 to $8,750,000. This is an example of _____________.

a. the bullwhip effect b. demand manipulation c. supply inadequacy d. order instability

22) A major block in the widespread implementation of collaborative commerce is ______________.

a. the theory of collaborative commerce hasn’t been proven effective in real-world applications. b. the technology needed isn’t available. c. collaborative commerce is extremely expensive. d. the lack of universally accepted standards.

23) All of the following are true about product life cycle management (PLM) except:

24) The Lotus Notes/Domino suite includes all of the following except:

a. instant video. b. document management. c. database. d. communication support.

25) Infrastructure needed for groupware include all of the following except:

a. VoIP. b. intranets. c. extranets. d. the Internet.

Unit 2 Examination

BAM 570 E-Commerce Management

Written Assignment for Unit Two

• Include your name, student number, course number, course title and unit number on each page of your written assignment (this is for your protection in case your materials become separated).

• Begin each written assignment by identifying the question number you are answering followed by the actual question itself (in bold type).

• Use a standard essay format for responses to all questions (i.e. an introduction, middle paragraphs and conclusion).

• Responses must be submitted as a MS Word Document only, typed double-spaced, using a standard font (i.e. Times New Roman) and 12 point type size.

Undergraduate courses: 350 - 500 words or 1 - 2 pages. Graduate courses: 500 - 750 words or 2 - 3 pages. Doctoral courses: 750 - 1000 words or 4 - 5 pages.

Plagiarism

Please answer ONE of the following:

1) How can live Web events be used as advertising strategy? Explain three of the best practices for successful live Web events.

2) Evaluate the importance of customer loyalty and identify ways to increase e-loyalty.

3) Detail five major benefits of B2B for buyers or sellers or both.

You Can Do It

BAM 570 E-Commerce Management

With Unit 2 complete, you are half way through the course.

Take a break and reward yourself

for a job well done!

Objectives

BAM 570 E-Commerce Management

Chapter Seven Innovative EC Systems: From E-Government and E-Learning to

Consumer-to-Consumer E-Commerce

Learning Objectives

Upon successful completion of this chapter, you should be able to:

1. Evaluate various e-government initiatives.

2. Scrutinize e-government implementation issues.

3. Critique e-learning, virtual universities, and e-training.

4. Consider online publishing and e-books.

5. Assess knowledge management and dissemination as an e-business.

6. Appraise C2C activities.

Instructions to Students • Read pages 294 - 338 of your textbook

• Reference: Electronic Commerce: A Managerial Perspective by Efraim Turban, David King, Jae Lee, Ting-Peng Liang, Deborrah Turban, 2010

Overview

BAM 570 E-Commerce Management

E-government is the use of IT and e-commerce to provide access to government information and delivery of public services to citizens and business partners. The four categories are: government-to-citizens, government-to-business, government-to-government and government-to-employees.

The six stages of e-government development are information publishing/dissemination, official two-way transactions, multipurpose portals, portal personalization, clustering of common services and full integration and enterprise transformation. Some of the issues involved with the implementation of e-government include the speed of transformation, the implementation of G2B implementation and security issues.

Key Terms

BAM 570 E-Commerce Management

The key terms listed below are terms you should be familiar with. Write your definition below each item. Check your answers at the end of this chapter.

E-government:

Mobile government (m-government):

E-learning:

Virtual university:

E-democracy (cyberdemocracy, digital democracy):

Online publishing:

Podcast:

Knowledge management (KM):

Knowledge portal:

Peer-to-peer (P2P):

Summary

BAM 570 E-Commerce Management

Governments worldwide are providing a variety of services to citizens over the Internet. Such initiatives increase citizens’ satisfaction and decrease government expenses in providing customer service applications including electronic voting. Governments also are active in electronically trading with businesses. Finally, EC is doing business within and between governments.

Governments, like other organizations, can use EC applications for great savings. Notable applications are e-procurement using reverse auctions, e-payments to and from citizens and businesses, auctioning of surplus goods and electronic travel and expense management systems. Governments also conduct electronic business with other governments. Finally, governments can facilitate homeland security with EC tools.

Online publishing of newspapers, magazines and books is growing rapidly, as is the online publishing of other digitizable items such as software, music, games, movies and other entertainment; nonetheless, of special interest is blogging, the publishing of newsletter-like commentaries by individuals on the Internet.

E-learning is the delivery of educational content via electronic media including the Internet and intranets. Degree programs, lifelong learning topics and corporate training are delivered by thousands of organizations worldwide.

Knowledge has been recognized as an important organizational asset. It needs to be properly captured, stored, managed and shared. Knowledge is critical for many e-commerce tasks. Knowledge can be shared in different ways; expert knowledge can be provided to nonexperts (for a fee or free) via a knowledge portal or as a personal service (e.g., via e-mail).

C2C consists of consumers conducting e-commerce with other consumers, mainly in auctions (such as at e-Bay). Buying and selling of goods and personal services can also take place through the use of online classified ads, exchanges and special services.

Self Test

BAM 570 E-Commerce Management

Multiple Choice Questions (Circle the correct answer)

1) An example of G2C is ____________.

a. an employee at the Chamber of Commerce gets local demographic data from a U.S. census site. b. a driver applies for and pays for the renewal of his auto tag online. c. a road contractor uses the Internet to submit a closed bid on a paving contract. d. a regional hospital conducts an online reverse auction for cleaning supplies.

2) Sharing information more quickly and conveniently between the federal and state, local and tribal governments is a performance objective of which category of e-government?

a. G2C b. G2B c. G2G d. IEE

3) All of the following are reasons to implement electronic voting except:

a. voting processes inherently are subject to error. b. voting processes cannot be confirmed. c. voting processes are historically subject to manipulation. d. voting processes are subject to fraud or attempts to rig the votes.

4) A government agency uses a reverse e-auction to comply with the tendering system requirements specified by law. This is an example of ____________.

a. e-government b. G2C e-commerce c. G2B e-commerce d. e-procurement

5) What motivated the implementation of government e-procurement?

a. Governments must interact with other types of governments on a daily basis. b. Governments buy large amounts of MROs and other materials directly from suppliers. c. The government needs to offer training and education to thousands of employees. d. Technology made it possible to quickly implement government-wide systems.

Self Test

BAM 570 E-Commerce Management

6) All of the following are potential drawbacks of e-learning except:

a. instructors must be retrained. b. knowledge retention is lower than in traditional classrooms. c. assessment issues remain to be resolved. d. the intellectual property of content developers must be protected.

7) The primary advantage that e-books offer publishers is _____________.

a. the ability to reach many readers b. lower production, marketing, and delivery costs c. the ease of customizing textbooks and trade books d. the ease of updating books in real-time

8) A major purpose of an organizational knowledge base is to support and allow _____________.

a. knowledge sharing b. e-learning c. responsible blogging d. organizational capital

9) Knowledge is of limited value if _____________.

a. it is not shared b. company databases are not accessible to decision makers c. users contribute their own specialized content d. companies protect it to maintain competitive advantage

10) Knowledge _____________ involves using various computer-based tools and techniques to analyze transaction data and generate new ideas.

a. capture b. classification c. creation d. management

Critical Analysis

Critical Analysis / Case Study Problems

BAM 570 E-Commerce Management

1. Assess the advantages of e-learning in the corporate training environment.

2. Consider the relationship between KM and a KM portal.

3. Contrast the advantages of expert locations systems over corporate knowledge bases that contain experts’ knowledge. What are the disadvantages? Can they be combined? How?

Answer Keys

BAM 570 E-Commerce Management

Key Term Definitions

E-government: E-commerce model in which a government entity buys or provides goods, services, or information to businesses or individual citizens.

Mobile government (m-government): The wireless implementation of e-government mostly to citizens but also to business.

E-learning: The online delivery of information for purposes of education, training, or knowledge management.

Virtual university: An online university from which students take classes from home or other offsite locations, usually via the Internet.

E-democracy (cyberdemocracy, digital democracy): The use of EC and electronic communication technologies, such as the Internet, in enhancing democratic processes within a democratic country.

Online publishing: Online publishing is the electronic delivery of newspapers, magazines, books, news, music, videos, and other digitizable information over the Internet.

Podcast: A media file that is distributed over the Internet using syndication feeds for playback on mobile devices and personal computers. As with the term radio, it can mean both the content and the method of syndication.

Knowledge management (KM): The process of capturing or creating knowledge, storing it, updating it constantly, disseminating it, and using it whenever necessary.

Knowledge portal: A single point of access software system intended to provide timely access to information and to support communities of knowledge workers.

Peer-to-peer (P2P): Applications that use direct communications between computers (peers) to share resources, rather than relying on a centralized server as the conduit between client devices.

Answer Keys

BAM 570 E-Commerce Management

Answers to Self Test

1) b

2) c

3) b

4) d

5) b

6) b

7) b

8) a

9) a

10) c

Solutions Guide

Critical Analysis / Case Study Problems - Suggested Solutions

BAM 570 E-Commerce Management

1. Assess the advantages of e-learning in the corporate training environment.

There are many potential advantages to e-learning in a corporate training environment including reduced travel costs, increased volume of training—leading to greater employee knowledge, elimination of time and distance barriers, as well as cost savings.

2. Consider the relationship between KM and a KM portal.

Knowledge management systems strive to capture, retain, categorize, retrieve, and display information to users. Portals also attempt to display a variety of knowledge-based products to individuals. Portals are designed for the general public and will generally include only knowledge from public sources. Knowledge management systems are generally used internally by a company to provide access to a combination of both public and private information to aid decision making.

3. Contrast the advantages of expert locations systems over corporate knowledge bases that contain experts’ knowledge. What are the disadvantages? Can they be combined? How?

Student answers will vary. ELS provide access to a much more robust information source when needed information is dependent on several factors. It does take longer than a knowledge base, and has the potential of incorrect information. In theory, these systems could be combined, and use the users’ locations as an additional search parameter to help with results and data input.

Notes

BAM 570 E-Commerce Management

Objectives

BAM 570 E-Commerce Management

Chapter Eight Mobile Computing and Commerce and Pervasive Computing

Learning Objectives

Upon successful completion of this chapter, you should be able to:

1. Propose value-added attributes, benefits and fundamental drivers of m-commerce.

2. Scrutinize the four major types of wireless telecommunications networks.

3. Consider m-commerce applications in finance.

4. Chart m-commerce applications in shopping, advertising and provision of content.

5. Judge the application of m-commerce within organizations and across the supply chain.

6. Understand the technologies and potential application of location-based m-commerce.

7. Assess the key characteristics, critical technologies, and major applications of pervasive computing.

Instructions to Students • Read pages 339 – 382 of your textbook

• Reference: Electronic Commerce: A Managerial Perspective by Efraim Turban, David King, Jae Lee, Ting-Peng Liang, Deborrah Turban, 2010

Overview

BAM 570 E-Commerce Management

Mobile commerce (m-commerce), also known as M-business, includes any business activity conducted over a wireless telecommunications network. This includes B2C and B2B commercial transactions as well as the transfer of information and services via wireless mobile devices, especially in intrabusiness. Like regular EC applications, m-commerce can be done via the Internet, via private communication lines or over other computing networks.

M-commerce is a natural extension of e-commerce. Mobile devices create an opportunity to deliver new services to existing customers and to attract new ones. However, the small screen size and limited bandwidth of most computing devices have limited consumer interest. So even though the mobile computing industry recognizes the potential for B2C m-commerce applications, the number of existing applications is quite small and uptake has been minimal. Instead, it is intrabusiness applications that are receiving most of the attention and offer the best short-range benefits for businesses.

Key Terms

BAM 570 E-Commerce Management

The key terms listed below are terms you should be familiar with. Write your definition below each item. Check your answers at the end of this chapter.

Mobile commerce (m-commerce, m-business):

Short message service (SMS):

Enhanced messaging service (EMS):

3G:

Mobile worker:

Global positioning system (GPS):

Pervasive computing:

Internet of Things (IOT):

Radio frequency identification (RFID):

Sensor network:

Summary

BAM 570 E-Commerce Management

M-commerce is any business activity conducted over a wireless telecommunications network. M-commerce is a natural extension of e-commerce.

Mobile computing devices vary in size and functionality. One limitation of m-commerce is the poor usability of mobile devices with small screens, reduced memory, limited bandwidth and restricted input capabilities.

M-commerce can help a business improve its value proposition to customers by utilizing its unique attributes: ubiquity, convenience, interactivity, personalization and localization.

Many EC applications in the service industries (e.g., banking, travel, and stocks) can be conducted with wireless devices. Also, shopping can be done from mobile devices. Location-based advertising and advertising via SMSs is expected to increase. Mobile portals aggregate and provide content and services for mobile users.

Intrabusiness applications such as sales force mobilization, inventory management and wireless job dispatch offer the best opportunities for high return on investment for most organizations, at least in the short term.

The mobile computing environment offers special challenges for security, including the need to secure transmission over open air and through multiple connecting networks. The biggest technological changes relate to the usability of devices. Finally, ethical, legal and health issues can arise from the use of m-commerce, especially in the workplace.

This is the world of invisible computing in which virtually every object has an embedded microprocessor that is connected in a wired or wireless fashion to the Internet. Smart homes, smart appliances, smart cars and other applications of pervasive computing will provide a number of life-enhancing, consumer-centric and B2B applications.

Self Test

BAM 570 E-Commerce Management

Multiple Choice Questions (Circle the correct answer)

1) M-commerce transactions and activities require _____________ and _____________.

a. wired networks; access points b. cell phones; portable computers c. hardware and software infrastructures; infrastructure support d. smartphones; switches

2) Components of a wireless infrastructure that support delivery of services over a wireless connection are ____________.

a. mobile communications server switches b. GPS locators c. smartphones d. Web servers and microbrowsers

3) Characteristics of mobile devices that need to be considered when designing mobile computing systems include all of the following except:

a. small screens. b. reduced memory. c. restricted input capabilities. d. broad bandwidth.

4) Rick sends a message from a delayed flight to his friend on her cell phone that he will be arriving late. The service that allows the sending and receiving of such short text messages on mobile phones is called _____________.

a. LOL b. MSG c. SMS d. TMG

5) A ____________ is suitable for mobile users who need to make very short-range device-to-device wireless connections within a small space, such as a single room, and most commonly with Bluetooth.

a. personal area network b. local area network c. wireless area network d. Wi-Fi area network

Self Test

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6) WiMax and 3G wireless mobile technologies could offer telemedicine application opportunities that include all of the following except:

a. Prescriptions can be transferred electronically to the appropriate pharmacy reducing errors. b. Wearable heart monitors linked to a cell phone can automatically contact doctors or family members at the first sign of health problems. c. There can be real-time consultation between a patient in one location and a medical specialist in another. d. There is a reduced threat of malpractice suits because there is no hands-on interaction between the remote physician and the patient.

7) Mobile POS (point-of-sale) payments are also known as ________ or contactless payments.

a. mobility b. remote c. proximity d. distance

8) The major enterprise mobile applications are all of the following except:

a. e-mail and cell phone contacts. b. sales force automation. c. field force automation. d. research and development.

9) All of the following are security-related issues of m-commerce except:

a. post-transaction security issues of auditing and nonrepudiation are less difficult because cell phones have the capability to store the digital equivalent of a receipt. b. the basic security goals of confidentiality, authentication, authorization and integrity are just as important for m-commerce as they are for e-commerce. c. as the capabilities of cell phones and PDAs increase and converge, the threat of attack from malicious code increases. d. an appropriate level of security must be maintained on each network that traffic flows through, in spite of the fact that interoperability among the various networks is difficult.

10) In order to protect the privacy of individuals, privacy protection defenses must be __________.

a. designed into RFID tags, nodes, and networks b. addressed in a post hoc fashion c. addressed in an ad hoc fashion d. the responsibility of government agencies

Critical Analysis

Critical Analysis / Case Study Problems

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1. Evaluate the role that usability plays in the adoption of m-commerce.

2. Examine proximity-based wireless payments. How have they been used in the transportation arena?

3. How are GPS and GIS related?

Answer Keys

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Key Term Definitions

Mobile commerce (m-commerce, m-business): Any business activity conducted over a wireless telecommunications network or from mobile devices.

Short message service (SMS): A service that supports the sending and receiving of short text messages on mobile phones.

Enhanced messaging service (EMS): An extension of SMS that can send tiny pictures, simple animations, sounds and formatted text.

3G: The third generation of digital wireless technology, which will support rich media such as video. 3G utilizes packet switching in the high 15 to 20 MHz range.

Mobile worker: Any employee who is away from their primary work space at least 10 hours a week or 25 percent of the time.

Global positioning system (GPS): A worldwide satellite-based tracking system that enables users to determine their position anywhere on the earth.

Pervasive computing: Invisible, everywhere computing; it is computing capabilities being embedded in to the objects around us.

Internet of Things: The belief that everything will be trackable and thus objects will be able to be found and evaluated individually.

Radio frequency identification (RFID): A short-range radio frequency communication technology for remotely storing and retrieving data using devices called RFID tags and RFID readers.

Sensor network: A collection of nodes, sometimes as small as millimeters in length or diameter, capable of environmental sensing, local computation, and communication with its peers or with other higher performance nodes.

Answer Keys

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Answers to Self Test

1) c

2) b

3) d

4) c

5) a

6) d

7) c

8) d

9) a

10) a

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Critical Analysis / Case Study Problems - Suggested Solutions

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1. Evaluate the role that usability plays in the adoption of m-commerce.

Because of their mobile nature, current mobile devices generally have small screen sizes and may be difficult to use because of this. Since ease-of-use is driving many IT advancements, mobile commerce must be similarly easy to use.

2. Examine proximity-based wireless payments. How have they been used in the transportation arena?

The mobile payment provides the capability for customers to use their mobile handsets to make micropayments, electronic payments for small-purchase amounts, generally less than $10. Cellular telephone companies already have mechanisms for billing small amounts (e.g., send a text message for 10 cents) and charging them to the phone owner’s account. Accordingly, many mobile commerce transactions may use micropayment services offered by mobile network providers. These work well for making small payments for transportation such as bus fare.

3. How are GPS and GIS related?

GIS displays maps and directions, and GPS displays physical locations. When GPS and GIS are integrated, users can find where they are and receive directions from a map.

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Objectives

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Chapter Nine The Web 2.0 Environment and Social Networks

Learning Objectives

Upon successful completion of this chapter, you should be able to:

1. Analyze the Web 2.0 revolution, social and business networks and industry and market disruptors.

2. Understand the concept, structure, types and issues of virtual communities.

3. Evaluate social networking and social networking sites.

4. Characterize the major social networks.

5. Judge business-oriented and enterprise social networks.

6. Propose the commercial aspects of social networking.

7. Detail Web 2.0 entertainment.

8. Appraise the potential of Web 3.0 and Web 4.0.

Instructions to Students • Read pages 383 – 426 of your textbook

• Reference: Electronic Commerce: A Managerial Perspective by Efraim Turban, David King, Jae Lee, Ting-Peng Liang, Deborrah Turban, 2010

Overview

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The basic premise of social networking is that it gives people the power to share, making the world more open and connected. Social networking where members converse and connect with one another using cell phones or other mobile devices is mobile social networking.

Business social networking is thought to be a more cost effective method of generating new business rather than advertising or public relation efforts. Business social networking can be held in both the private and public eye, in internal and external communities. Enterprise social networks or corporate social networks are created by companies for their own use by employees, former employees and/or customers.

The interest in Web 2.0 applications is that many believe that social networks, blogs and other Web 2.0 activities will play a major role in the future of e-commerce. The major attraction is the volume of social networks and the possibility of viral marketing.

Web 3.0, still an unknown entity, is the future of Internet applications. It could radically change individuals’ career paths, as well as the organizations where they work, and it may even revolutionize social networking.

Key Terms

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The key terms listed below are terms you should be familiar with. Write your definition below each item. Check your answers at the end of this chapter.

Web 2.0:

Social media:

Virtual (Internet) communities:

Social network:

Social network analysis:

Enterprise social network:

Social marketplace:

Web 3.0:

Semantic Web:

Web 4.0:

Summary

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Web 2.0 is about the innovative application of existing technologies. Web 2.0 has brought together the contributions of millions of people and has made their work, opinions and identity matter. The consequences of rapid growth of person-to-person computing, such as blogging, are currently hard to understand and difficult to estimate. User-created content is a major characteristic of Web 2.0, as is the emergence of social networking. One impact of Web 2.0 is the creation of industry disruptors.

Virtual communities create new types of business opportunities–people with similar interests that congregate at one Website are a natural target for advertisers and marketers. Using chat rooms, members can exchange opinions about certain products and services. Of special interest are communities of transactions whose interest is the promotion of commercial buying and selling. Virtual communities can foster customer loyalty, increase sales of vendors that sponsor communities and facilitate customer feedback for improved service and business.

Social network services are very large Internet communities that enable the sharing of content including texts, videos and photos and promote online socialization and interaction. Hundreds of networks are popping up around the world, some of which are global, competing for advertising money.

Business-oriented social networks are communities that concentrate on business issues both in one country and around the world. Social marketplaces meld social networks and some aspects of business. Enterprise social networks are those owned and operated inside one company. Their members are usually employees and retirees. They are used mainly for collaboration, knowledge creation and preservation, training and socialization. Many large companies have such networks.

Web 2.0, social networking and entertainment give us rich media, user-created content and groups and subgroups with common interests opening many possibilities for a second generation of online entertainment. Add to this the wireless revolution, the increased capabilities in mobile devices to support Web 2.0 tools, and social networking activities and you will discover a new and exciting world of online entertainment.

Web 3.0, the next generation of the Web, will combine social and business computing. It will be more portable and personal with powerful search engines, increased clout and greater connectivity with the wireless environment and on-demand applications. Knowledge management will be one of its main pillars. The semantic Web will play a major role in Web 3.0 applications. Web 4.0 is a futuristic Web that will be built on ubiquitous and intelligent systems. It will connect “islands” of intelligence from different sources.

Self Test

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Multiple Choice Questions (Circle the correct answer)

1) Wikipedia is a free online collaborative encyclopedia that had to resolve each of the following problems except:

a. people with malicious agendas posting false information. b. competition from the bigger Encyclopedia Britannica. c. poor or substandard quality of the content. d. invasions of privacy.

2) All of the following are types of virtual communities except:

a. associations. b. affinity portals. c. search engines. d. gender and ethnic communities.

3) What is the top social network?

a. Bebo b. Facebook c. Friendster d. MySpace

4) All of the following are ways social networks generate revenues except:

a. offer a premium service for a monthly or per service fee. b. charge organizations a monthly service fee. c. host auctions for individuals or enterprises. d. have members pay a fee to be affiliated with the social network.

5) ________ , also called viral marketing, is free advertising that can increase the visibility of niche retailers and products.

a. Mixi b. Word-of-mouth c. Web 4.0 d. Semantic Web

6) The main purpose of LinkedIn is to allow registered users to ____________.

a. create and maintain a list of contact details of people they know and trust in business b. develop a client base based on referrals c. post and find technology jobs d. aid successful business launches

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7) Craigslist and MySpace provide ________ to search based on friends and contacts or by geographic proximity.

a. entrepreneurial networks b. classifieds and job listings c. virtual malls d. advertising campaigns

8) Apple’s iPhone uses a ________ , which is an accurate and patented interface.

a. multitouch touch screen b. dedicated control c. touch-sensitive display d. touch-pad

9) ___________ has/have the potential to enable faster connectivity, richer ways of interacting, and more powerful search engines.

a. Enterprise applications b. Application program interface (API) services c. Web 3.0 d. RSS and Web services

10) An evolving extension of the Web in which Web content can be expressed not only in natural language, but also in a form that can be understood, interpreted, and used by intelligent computer software agents is known as ____________.

a. net neutrality b. mobile social networks c. Semantic Web d. voice commerce

Critical Analysis

Critical Analysis / Case Study Problems

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1. Characterize social marketplace.

2. What are the major characteristics of Web 2.0? What are some of the advantages of Web 2.0 applications?

Answer Keys

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Key Term Definitions

Web 2.0: The popular term for advanced Internet technology and applications, including blogs, wikis, RSS, and social bookmarking. One of the most significant differences between Web 2.0 and the traditional World Wide Web is greater collaboration among Internet users and other users, content providers, and enterprises.

Social media: The online platforms and tools that people use to share opinions, experiences, insights, perceptions, and various media, including photos, videos, and music, with each other.

Virtual (Internet) communities: A group of people with similar interests who interact with one another using the Internet.

Social network: A special structure made of individuals (or organizations). It includes the ways in which individuals are connected through various social familiarities.

Social network analysis: The mapping and measuring of relationships and information flows among people, groups, organizations, computers and other information or knowledge-processing entities. The nodes in the network are the people and groups, whereas the links show relationships or flows between the nodes. SNA provides both a visual and a mathematical analysis of relationships.

Enterprise social network: This is a business social network focused on a single company, and protected within the company network.

Social marketplace: The term social marketplace is derived from the combination of social networking and marketplace, such that a social marketplace acts like an online community harnessing the power of one’s social networks for the introduction, buying, and selling of products, services, and resources, including people’s own creations. A social marketplace can also be referred to as a structure that resembles a social network but has a focus on its individual members.

Web 3.0: A term used to describe the future of the World Wide Web. It consists of the creation of high-quality content and services produced by gifted individuals using Web 2.0 technology as an enabling platform.

Semantic Web: An evolving extension of the Web in which Web content can be expressed not only in natural language, but also in a form that can be understood, interpreted, and used by intelligent computer software agents, permitting them to find, share, and integrate information more easily.

Web 4.0: The Web generation after Web 3.0. It is still an unknown entity. However, it is envisioned as being based on islands of intelligence and as being ubiquitous.

Answer Keys

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Answers to Self Test

1) b

2) c

3) d

4) c

5) b

6) a

7) b

8) a

9) c

10) c

Solutions Guide

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1. Characterize social marketplace.

The term social marketplace is derived from the combination of social networking and marketplace, such that a social marketplace acts like an online community harnessing the power of one’s social networks for the introduction, buying, and selling of products, services, and resources, including people’s own creations. A social marketplace can also be referred to as a structure that resembles a social network but has a focus on its individual members.

2. What are the major characteristics of Web 2.0? What are some of the advantages of Web 2.0 applications?

The following are representative characteristics (O’Reilly 2005):

• The ability to tap into the collective intelligence of users. The more users contribute, the more popular and valuable a Web 2.0 site becomes. • Making data available in new or never-intended ways. Web 2.0 data can be remixed or “mashed up,” often through Web-service interfaces, much the way a dance-club DJ mixes music. • The presence of lightweight programming techniques and tools that let nearly anyone act as a developer. • The virtual elimination of software-upgrade cycles makes everything a perpetual beta, or work in progress, and allows rapid prototyping using the Web as a platform. • Networks as platforms, delivering and allowing users to use applications entirely through a browser. • Users own the data on the site and exercise control over that data. • An architecture of participation and digital democracy encourages users to add value to the application as they use it. • New business models are created (Chesbrough 2006). • A major emphasis on social networks.

Notes

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Unit 3 Examination Instructions

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The Unit Examination

The Unit Examination contains 25 multiple choice questions, as well as a writing assignment.

Your grade on the examination will be determined by the percentage of correct answers. The University utilizes the following grading system:

A = 90% – 100% correct B = 80% – 89% correct C = 70% – 79% correct D = 60% – 69% correct F = 59% and below correct

4 grade points 3 grade points 2 grade points 1 grade point 0 grade points

Completing Unit Three Examination

Additional detailed information on completing the examination, writing standards and how to submit your completed examination may be found in the Syllabus for this course.

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Unit 3 Examination

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Multiple Choice Questions (Enter your answers on the enclosed answer sheet)

1) All of the following are examples of e-government except:

a. an eBay-seller sells surplus army supplies. b. a contractor submits an application for a building permit using a city hall Web site. c. an unemployed worker consults a Website operated by the state employment department to learn about job openings in his city. d. a citizen takes an online drivers’ education course.

2) An example of G2C is ___________.

3) Sharing information more quickly and conveniently between the federal and state, local, and tribal governments is a performance objective of which category of e-government?

a. G2C b. G2B c. G2G d. IEE

4) Chaplin reports quarterly sales revenue from his business to city hall over the Internet. He pays his local business tax with a credit card. This is an example of _____________.

a. e-government b. G2C e-commerce c. G2B e-commerce d. e-procurement

5) A government agency uses a reverse e-auction to comply with the tendering system requirements specified by law. This is an example of _____________.

a. e-government b. G2C e-commerce c. G2B e-commerce d. e-procurement

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6) What motivated the implementation of government e-procurement?

7) All of the following describe Second Life (SL) and SL Educators (SLED) except:

a. SLED sponsors meet-and-greet events in SL, helping real-life educators to connect with each other. b. Educators have been slow to embrace SL because of the complexity of its media-rich features. c. Students and educators can work together in SL from anywhere in the world as part of a globally networked virtual classroom environment. d. Using SL as a supplement to traditional classroom environments provides new opportunities for enriching existing curricula.

8) More and more people are willing to pay for digital music, as shown by the success of ______________.

a. Napster b. Kazaa c. iTunes d. P2P

9) E-books can be delivered in all of the following ways except:

a. via Web access. b. via Web download. c. via RFID. d. via dedicated reader.

10) The primary advantage that e-books offer publishers is _____________.

a. the ability to reach many readers b. lower production, marketing, and delivery costs c. the ease of customizing textbooks and trade books d. the ease of updating books in real-time

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11) A major purpose of an organizational knowledge base is to support and allow ______________.

a. knowledge sharing b.e-learning c. responsible blogging d. organizational capital

12) M-commerce transactions and activities require _____________ and ______________.

a. wired networks; access points b. cell phones; portable computers c. hardware and software infrastructures; infrastructure support d. smartphones; switches

13) Characteristics of mobile devices that need to be considered when designing mobile computing systems include all of the following except:

a. small screens. b. reduced memory. c. restricted input capabilities. d. broad bandwidth.

14) A ___________ is suitable for mobile users who need to make very short-range device-to-device wireless connections within a small space, such as a single room, and most commonly with Bluetooth.

a. personal area network b. local area network c. wireless area network d. Wi-Fi area network

15) A(n) ____________ is a computer system capable of integrating, storing, editing, analyzing, sharing, and displaying spatial information.

a. GIS b. GPS c. L-commerce system d. OnStar system

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16) You are walking near a coffee shop and suddenly your cell phone beeps with a message: “Come inside and get a free biscotti with any purchase.” This is an example of _____________.

a. permission marketing b. location-based advertising c. customer relationship management d. m-commerce

17) Health risks of cell phone use include all of the following except:

a. cell phone addiction. b. damage from cell radio frequency emissions. c. spinal injury. d. repetitive stress injury.

18) Ethical issues raised by m-commerce include all of the following except:

a. limited access to data and documents. b. privacy invasion. c. infringing on workers’ personal time. d. isolation.

19) In order to protect the privacy of individuals, privacy protection defenses must be __________.

a. designed into RFID tags, nodes, and networks b. addressed in a post hoc fashion c. addressed in an ad hoc fashion d. the responsibility of government agencies

20) The banking industry was a good candidate for disruption by person-to-person (P2P) technology and disintermediation by ZOPA because _____________.

a. the industry offers a widely-needed service b. of fierce competition and low barriers to entry c. the industry was making huge profit margins off customers d. the industry had small profit margins

21) _____________ are companies that introduce a significant change in their industries, thus causing a disruption in normal business operations.

a. Disruptors b. Mashups c. Information clouds d. Web 3.0

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22) The real estate brokerage industry has been disrupted by companies such as Zillow and HomeGain for each of the following reasons except:

a. Homeowners can enter zillow.com and go to zestimate to get an approximation of their home’s market value with a map of the neighborhood. b. The Zillow and Homegain sites provide more services and information than Web 1.0. c. The Web 2.0 real estate sites have driven down commissions from 6 percent to almost 1 percent. d. Homeowners can get comparisons of the estimated price of their home with neighbors’ homes.

23) Companies can interface with social networks in all of the following ways except:

a. use search engine optimization (SEO) to increase search engine ranking. b. use existing public social networks, such as Facebook or MySpace, or virtual worlds, such as Second Life to create pages and microcommunities. c. create an in-house private social network and then use it for communication and collaboration among employees and retirees or with outsiders. d. conduct business activities in a business-oriented social network, such as LinkedIn, or sponsor such a site.

24) Craigslist and MySpace provide ________ to search based on friends and contacts or by geographic proximity.

a. entrepreneurial networks b. classifieds and job listings c. virtual malls d. advertising campaigns

25) ________ has/have the potential to enable faster connectivity, richer ways of interacting, and more powerful search engines.

a. Enterprise applications b. Application program interface (API) services c. Web 3.0 d. RSS and Web services

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Written Assignment for Unit Three

• Include your name, student number, course number, course title and unit number on each page of your written assignment (this is for your protection in case your materials become separated).

• Begin each written assignment by identifying the question number you are answering followed by the actual question itself (in bold type).

• Use a standard essay format for responses to all questions (i.e. an introduction, middle paragraphs and conclusion).

• Responses must be submitted as a MS Word Document only, typed double-spaced, using a standard font (i.e. Times New Roman) and 12 point type size.

Undergraduate courses: 350 - 500 words or 1 - 2 pages. Graduate courses: 500 - 750 words or 2 - 3 pages. Doctoral courses: 750 - 1000 words or 4 - 5 pages.

Plagiarism

Please answer ONE of the following:

1) What are the business forces that are driving the transition from traditional education to online learning?

2) Briefly describe Web 2.0. How does it differ from the traditional Web?

3) Detail how technological, business, social and economic factors have contributed to the development of m-commerce.

You Can Do It

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Unit 3 is done! You’re close to the finish line and we’re cheering you on to victory!

Objectives

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Chapter Thirteen E-Commerce Strategy and Global EC

Learning Objectives

Upon successful completion of this chapter, you should be able to:

1. Relay the strategic planning process.

2. Investigate the purpose and content of a business plan and a business case.

3. Consider how e-commerce impacts the strategic planning process.

4. Understand how to formulate, justify, and prioritize EC applications.

5. Measure strategy implementation and assessment, including the use of metrics.

6. Critique the issues involved in global EC.

7. Analyze the impact of EC on small and medium-sized businesses.

Instructions to Students • Read pages 543 – 584 of your textbook

• Reference: Electronic Commerce: A Managerial Perspective by Efraim Turban, David King, Jae Lee, Ting-Peng Liang, Deborrah Turban, 2010

Overview

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Strategy happens all the time. At a personal level, a university student decides on a career as a long-term strategy and then puts into place certain goals (e.g., a degree in the chosen field) and objectives (e.g., timely completion of courses at a desired level of achievement) in order to implement that strategy. Nationally and internationally, world leaders set economic, political and social strategies which are implemented through legislation, regulations, policies and projects.

Organizational leaders strategize, too—in goal setting, business planning, resource allocation and project management activities. An organizational strategy is a broad-based formula for how a business is going to compete, what its goals should be and what plans and policies will need to be implemented to accomplish these goals.

Strategy is more than deciding what a company should do next. Strategy is also about making tough decisions. Strategic positioning concerns making decisions about tradeoffs, recognizing that a company must abandon or not pursue some products, services and activities in order to excel at others.

Any contemporary strategy-setting process must include the Internet. Strategy guru Michael Porter (2001) argues that a coherent organizational strategy that includes the Internet is more important than ever before.

The impact of the Internet on strategic competitiveness and long-term profitability will differ from industry to industry. Accordingly, many businesses are taking a focused look at the impact of the Internet and EC on their future. For these firms, an e-commerce strategy, or e-strategy, is the formulation and execution of a vision of how a new or existing company intends to do business electronically.

Key Terms

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The key terms listed below are terms you should be familiar with. Write your definition below each item. Check your answers at the end of this chapter.

Business plan:

Business process reengineering (BPR):

Competitor analysis grid:

Co-opetition:

Project champion:

SWOT analysis:

Value proposition:

Versioning:

Virtual corporation (VC):

Web analytics:

Summary

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The strategic planning process is composed of four major phases: initiation, formulation, implementation and assessment.

Considering e-commerce in strategic development does not radically change the process, it does impact the outcome. Move-to-the-Net firms must approach the process differently than born-on-the-Net firms, but both types of firms must recognize the way electronic technologies, such as the Internet, make an e-difference. Because of the comprehensiveness of EC, formal stra- tegic planning is a must.

The strategy initiation phase involves understanding the company, the industry, and the competition. Companies must consider questions such as “Should we be a first mover?” “Should we go global?” “Should we create a separate company or brand?” In strategy formulation, specific opportunities are selected for implementation based on project viability, company fit, cost-benefit, risk and pricing.

Creating an effective Web team and ensuring that sufficient resources are available initiate the implementation phase. Other important implementation issues are whether to outsource various aspects of development and the need to redesign existing business processes. Immediately after implementation, assessment begins. Metrics provide feedback and management acts by taking corrective action and reformulating strategy if necessary.

Going global with EC can be done quickly and with a relatively small investment. However, businesses must deal with a number of different issues in the cultural, administrative, geographic and economic dimensions of global trading.

Depending on the circumstances, innovative small companies have a tremendous opportunity to adopt EC with little cost and to expand rapidly. Being a niche market provides the best chance for small business success and a variety of Web-based resources are available that small business owners can use to help ensure success.

Self Test

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Multiple Choice Questions (Circle the correct answer)

1) For ___________ companies, it may be even more important to change strategies quickly.

a. traditional b. pure play c. service d. retail

2) Projections of the business technological, political, economic, and other environments are called ____________.

a. forecasts. b. SWOT analysis. c. competitive intelligence. d. value propositions.

3) Google’s ____________ is its expertise in information search technology.

a. company analysis b. value proposition c. core competency d. functional strategy

4) All of the following are situations when a business plan should be done except:

a. when an existing business is deploying a CRM system. b. when a new business is seeking start-up funds and other resources. c. when an existing company is planning to create a separate division. d. when an existing company is planning to launch the company in a new direction.

5) Which of the following about business plans and business cases is not correct?

a. The content of a business case is similar to that of a business plan. b. One difference is that the business plan concentrates on the viability of a company, whereas a business case assesses both the viability of the project and the fit of the initiative with the firm’s mission and goals. c. The audiences are the same senior management and the board of directors. d. The purposes are the same to justify a specific investment of funds.

Self Test

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6) Factors that determine whether a first mover succeeds or fails in the EC marketplace include all of the following except:

a. the size of the opportunity. b. the speed of market entry. c. the nature of the product. d. whether the company can be the best in the market.

7) The most efficient way to expand an organization’s scope is ____________.

a. to introduce new products or services into new or existing markets without increasing production facilities or staff. b. by increasing the size or scale of the business. c. by expanding the firm’s appeal to a new set of customers. d. to buy a company with complementary products or services.

8) All of the following determine the degree of collaboration between offline and online activities of a business except:

a. corporate culture. b. the ability of top management to introduce change properly. c. the pricing strategy. d. the use of innovative processes that support collaboration.

9) Internet technologies can provide consumers with easier access to pricing information, which increases their bargaining power. To remain competitive and profitable, sellers need smarter pricing strategies, which include all of the following strategies except:

a. greater precision in setting prices. b. more adaptability in changing prices. c. new ways of customer segmentation for differentiated pricing. d. reducing prices.

10) The most important objectives of strategic assessment are all of the following except:

a. measure the extent to which the EC strategy and ensuing projects are delivering what they were supposed to deliver. b. determine if the EC strategy and projects are still viable in the current environment. c. reassess the initial strategy in order to learn from mistakes and improve future planning. d. identify what competitors are doing to avoid head-on competition.

Critical Analysis

Critical Analysis / Case Study Problems

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1. How should the Internet and EC be considered by business strategic planners, IS strategists and ICT planners?

2. Propose three strategies for smarter pricing online.

Answer Keys

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Key Term Definitions

Business plan: A written document that identifies the company’s goals and outlines how the company intends to achieve those goals and at what cost.

Business process reengineering (BPR): A methodology for conducting a comprehensive redesign of an enterprise’s processes.

Competitor analysis grid: A strategic planning tool that highlights points of differentiation between competitors and the target firm.

Co-opetition: Two or more companies cooperate together on some activities for their mutual benefit, even while competing against each other in the marketplace.

Project champion: The person who ensures the EC project gets the time, attention, and resources required and defends the project from detractors at all times.

SWOT analysis: A methodology that surveys external opportunities and threats and relates them to internal strengths and weaknesses.

Value proposition: The benefit that a company’s products or services provide to customers; the consumer need that is being fulfilled.

Versioning: Selling the same good, but with different selection and delivery characteristics.

Virtual corporation (VC): An organization composed of several business partners sharing costs and resources for the production or utilization of a product or service.

Web analytics: The analysis of click-stream data to understand visitor behavior on a Website.

Answer Keys

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Answers to Self Test

1) b

2) a

3) c

4) a

5) c

6) b

7) a

8) c

9) d

10) d

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1. How should the Internet and EC be considered by business strategic planners, IS strategists, and ICT planners?

Information systems strategists need to consider the Internet as a tool for collecting and distributing information to where it is required. ICT planners will need to plan the integration of the Internet-based technologies into the existing ICT infrastructure. Thinking about and planning for the Internet should be subsumed into each of the three strategy levels (McKay and Marshall 2004).

2. Propose three strategies for smarter pricing online.

Traditional methods for determining price are the cost-plus and competitor models. Cost-plus means adding up all the costs involved—material, labor, rent, overheads, and so forth—and adding a percentage mark-up as profit. The competitor model determines price based on what competitors are charging for similar products in the marketplace. Another strategy is to create multiple versions of a product and vary the pricing by channel (as opposed to product attributes).

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Chapter Fourteen Economics and Justification of Electronic Commerce

Learning Objectives

Upon successful completion of this chapter, you should be able to:

1. Dissect the need for justifying EC investments, how it is done and how metrics are used to determine justification.

2. Understand the difficulties in measuring and justifying EC investments.

3. Recognize the difficulties in establishing intangible metrics and describe how to overcome them.

4. Chart and briefly describe traditional and advanced methods of justifying IT investments.

5. Analyze how e-CRM, e-learning, and other EC projects are justified.

6. Interpret some economic principles of EC.

7. Consider how product, industry, seller and buyer characteristics impact the economics of EC.

8. Recognize key factors to the success of EC projects and the major reasons for failures.

Instructions to Students • Read pages 585 – 623 of your textbook

• Reference: Electronic Commerce: A Managerial Perspective by Efraim Turban, David King, Jae Lee, Ting-Peng Liang, Deborrah Turban, 2010

Overview

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Justifying an EC investment means comparing the costs of the project against its benefits in what is known as a cost-benefit analysis. Even when formal analysis is not required, an organization should have some qualitative analysis to explain the logic of investing in the EC project.

Metrics are used to describe costs, benefits, or the ratio between them. They are used not only for justification, but also for other economic activities (e.g., to compare employee performance in order to reward specific employees).

One basic way to categorize different EC investments is to distinguish between investment in infrastructure and investment in specific EC applications.

One of the major benefits of using EC is increased productivity. However, productivity increases may be difficult to measure for a number of different reasons.

E-procurement is not limited to just buying and selling; it also encompasses the various processes involved in buying and selling: selecting suppliers, submitting formal requests for goods and services to suppliers, getting approval from buyers, processing purchase orders, fulfilling orders, delivering and receiving items and processing payments.

Digitizable products, such as software, documents, music and videos are particularly well suited for e-markets because they can be distributed to customers electronically, resulting in instant delivery and very low distribution costs.

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The key terms listed below are terms you should be familiar with. Write your definition below each item. Check your answers at the end of this chapter.

Agility:

Metrics:

ROI calculators:

Digital options:

Product differentiation:

Production function:

Total cost of ownership (TCO):

Total benefits of ownership (TBO):

Transaction costs:

Valuation:

Summary

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Like any other investment, EC investment (unless it is small) needs to be justified. Many start-up companies have crashed because of no or incorrect justification. In its simplest form, justification looks at revenue minus all relevant costs. Analysis is done by defining metrics that are related to organizational goals.

The nature of EC makes it difficult to justify due to the presence of many intangible costs and benefits. In addition, the relationship between investment and results may be complex, extending over several years. Also, both costs and benefits may be shared among several projects and impacts (sometimes negative) may be felt in several areas.

Evaluating EC involves a financial analysis, usually an ROI analysis (profit = revenue - cost), as well as an assessment of the technology and its architecture. This may be discounted, using the NPV method, if the costs and benefits will extend over several years. A payback period describes how long it will take to recover the initial investment. However, financial ROI alone can lead to an incomplete and misleading evaluation. Tools to integrate the various ROI aspects of EC investment include the balanced scorecard (BSC), which also focuses on the internal business processes and learning and growth perspective of the business. EC ROI should take into account the risk of reducing possible failures or adverse events that can drain the financial ROI. Other advanced methods (e.g., real options, value analysis, benchmarks, and management by maxim) look at future benefits. No method is universal or perfect, so selecting a method (or a mix of methods) is critical.

All EC projects include intangible and tangible benefits and costs that must be identified. Then a method must be selected to match the particular characteristics of the EC application.

Products, industry, seller, and consumer characteristics require different metrics of EC value. With the growing worldwide connectivity to the Internet, EC economics will play a major role in supporting buyers and sellers. As compared with traditional commerce, EC can quickly succeed due to its ability to create network effects, lock-in effects and disintermediation, especially in the case of digital products.

Self Test

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Multiple Choice Questions (Circle the correct answer)

1) Metrics are used to describe all of the following except:

a. standards. b. costs. c. benefits. d. the ratio of costs to benefits.

2) In B2C, an example of a tangible EC metric from the buyer’s perspective is ____________.

a. ease of use of EC b. convenience in purchasing c. profit per customer d. cost/price of the product

3) Productivity benefits from using EC are difficult to measure because ____________.

a. the payoffs are too short b. there is no time lag in EC gains c. EC gains in certain areas of the company may be offset by losses in other areas d. qualitative benefits do not count

4) The major steps in the process of justifying large-scale EC and IT projects include all of the following except:

a. lay an appropriate foundation for analysis with your vendor and then conduct your ROI. b. document and verify all figures used in the calculation. Clarify all assumptions. c. do not leave out strategic benefits, including long-term ones. d. be careful not to overestimate cost and underestimate benefits (a tendency of many managers).

5) Pouilly’s Poodle Shop wants to produce monthly cash flows from its Internet Doggie-Cam investment. The most appropriate method for assessing this investment is ____________.

a.break-even analysis b.total cost of ownership c.payoff d.internal rate of return (IRR)

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6) All of the following direct metrics indicate progress in e-procurement except:

a. increased order fulfillment rate. b. decreased number of rejects received from suppliers. c. reduced inventory costs. d. increased on-time deliveries.

7) Justifying information security projects _____________.

a. is not needed because it is well-known that preventing network security problems is less labor intensive than cleaning up virus infections b. is not done because ROI calculators are not available c. should focus on defending against external threats such as hackers and malware d. should be done because employee security training is usually poorly done

8) EC can increase revenues by all of the following except:

a. increasing both reach and richness. b. allowing customers to order anytime from any place via the use of m-commerce and l-commerce. c. becoming an online portal. d. creating value-added content from selling searches, access to data, and electronic documents.

9) A Web-based seller of CDs carefully monitors the prices charged by its competitors for identical products. This company has the ability to change a given price within three minutes in response to changes by competitors. This is an example of EC _____________.

a. competitive advantage b. core competency c. product or service differentiation d. agility

10) As a company moves to incorporate an online presence with its traditional brick-and-mortar operation, it adds the costs related to training for all personnel, in the capabilities of the EC system, and a new advertising campaign to announce its new site to the costs directly associated with building the new Web presence. In this case, training and advertising are examples of ____________.

a. transaction costs b. complementary investments c. direct costs d. indirect costs

Critical Analysis

Critical Analysis / Case Study Problems

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1. Distinguish intangible costs and benefits and explain why they must be considered when justifying an IT investment.

2. Relate EC to cultural differences.

Answer Keys

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Key Term Definitions

Agility: An EC firm’s ability to capture, report and quickly respond to changes happening in the marketplace.

Metrics: A metric is a specific, measurable standard against which actual performance is compared.

ROI calculators: ROI calculators are pre-programmed systems that assist in the calculation of re- turn on investment by having the user enter a few required variables in order to create a result.

Digital options: A set of IT-enabled capabilities in the form of digitized enterprise work processes and knowledge systems.

Product differentiation: Special features available in products that make them distinguishable from other products. This property attracts customers that appreciate what they consider an added value.

Production function: An equation indicating that for the same quantity of production, Q, companies either can use a certain amount of labor or invest in more automation.

Total cost of ownership (TCO): A formula for calculating the cost of owning, operating, and controlling an IT system.

Total benefits of ownership (TBO): Benefits of ownership that include both tangible and intangible benefits.

Transaction costs: Costs that are associated with the distribution (sale) or exchange of products and services including the cost of searching for buyers and sellers, gathering information, negotiating, decision making, monitoring the exchange of goods, and legal fees.

Valuation: The fair market value of a business or the price at which a property would change hands between a willing buyer and a willing seller who are both informed and under no compulsion to act. For a publicly traded company, the value can be readily obtained by multiplying the selling price of the stock by the number of available shares.

Answer Keys

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Answers to Self Test

1) a

2) d

3) c

4) d

5) d

6) c

7) d

8) a

9) d

10) b

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1. Distinguish intangible costs and benefits and explain why they must be considered when justifying an IT investment.

When it comes to intangible costs and benefits, organizations must develop innovative metrics to track them as accurately as possible. Intangible costs may include the learning curve of the firm’s customer service employees to incorporate an EC system to respond to customer inquiries. Another intangible cost may involve having to change or adapt other business processes or information systems, such as processing items returned by customers or building and operating an inventory tracking system. An additional difficulty is separating EC costs from the costs of routine maintenance of inventory and other relevant IT systems.

2. Relate EC to cultural differences.

The acceptance of EC as a whole or certain aspects/models of EC may not be accepted in all cultures. In certain cultures, marketing methods of self-fulfillment may be met with disdain, and other approaches may need to be adopted. In the same way, the use of computers and the Internet itself may be viewed differently, effecting EC usage.

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Chapter Fifteen Launching a Successful Online Business and EC Projects

Learning Objectives

Upon successful completion of this chapter, you should be able to:

1. Understand the fundamental requirements for initiating an online business.

2. Detail the process of initiating and funding a start-up e-business or large e-project.

3. Analyze the process of adding EC initiatives to an existing business.

4. Consider the issues and methods of transforming an organization into an e-business.

5. Assess the process of acquiring Websites and evaluating building versus hosting options.

6. Recognize the importance of providing and managing content and describe how to accomplish this.

7. Evaluate Websites on design criteria, such as appearance, navigation, consistency and performance.

8. Assess how search engine optimization may help a Website obtain high placement in search engines.

Instructions to Students • Read pages 624 – 664 of your textbook

• Reference: Electronic Commerce: A Managerial Perspective by Efraim Turban, David King, Jae Lee, Ting-Peng Liang, Deborrah Turban, 2010

Overview

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Success in the online marketplace is never an assured outcome. As in the brick-and-mortar marketplace, the failure rate for online companies is high.

Online business formation must consider the unique online aspects of the business as well as appropriate products and services. In e-business planning, the major difference is the understanding of the unique aspects of the Internet and the sales channel.

Key Terms

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The key terms listed below are terms you should be familiar with. Write your definition below each item. Check your answers at the end of this chapter.

Angel investor:

Attractors:

Business case:

Business process management (BPM):

Domain name:

Incubator:

Information architecture:

Content:

Mirror site:

Search engine optimization (SEO):

Storebuilder service:

Summary

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A good idea becomes a successful online business when owners with the required skills, attitudes and understanding of Internet culture execute a powerful business plan.

Incubators usually provide support services, whereas angel investors and venture capitalists provide funds for a prospective online business. The business and business owners usually benefit greatly from these arrangements, but the funding sources are scarce and competition for funds is stiff.

Storebuilder services, ISPs, dedicated Website hosting services and self-hosting give online business owners a range of options in deciding how and where to host the Website. A well-chosen domain name is an “address for success,” a way of making the site easy to find and remember. Choosing a domain name is an important step in setting up the hosting site.

Content is the most vital component. It can be created, purchased or acquired for free and used for site promotion, sales and building customer relationships. Successful Websites offer content that the site’s target audience wants and expects.

Although text is content rich and inexpensive, a text-only site is a barren and unmemorable site. Graphics and colors should be selected with the site’s business goals and visitors’ needs in mind. Website owners and designers should never overestimate the attention span of the site visitor so it is best to include small graphics that are few in number so that the end result is an attractive page but one that also will load fast. The key to visitor-friendly navigation is to project a visitor’s mental map on the Website: where they are, where they have been, where they should go next and how to get to where they want to be.

Keyword occurrence and placement on a merchants’ site and promoting link popularity are the fundamental strategies for search engine optimization. High placement on search engine keyword searches will guarantee visitors the essential first step toward online business success.

Self Test

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Multiple Choice Questions (Circle the correct answer)

1) When creating a new business, the first step is to ____________.

a. write a business case or plan. b. acquire financing needed to make the business successful. c. investigate all existing opportunities. d. identify a consumer or business need that isn’t presently being met.

2) The principle reason for writing a business plan is to _____________.

a. help the founders remember what they are trying to accomplish. b. provide an operational framework for the business. c. acquire external funding. d. provide strategic direction to employees.

3) A(n) ___________ is a company, university, or nonprofit organization that supports promising businesses in their initial stages of development.

a. angel b. entrepreneur c. incubator d. venture capitalist

4) A ___________ site is an exact duplicate of the original Website physically located on a Web server on another continent.

a. backup b. mirror c. download d. hot

5) A major entertainment company has four studios that have been in the same location for more than ten years. The company includes a page on its Web site with addresses, phone numbers, and general e-mail addresses for each of these studios. None of this information has changed since the Website was developed. This is an example of ___________ content.

a. dynamic b. static c. organizational d. functional

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6) Reviews, testimonials, expert advice, or further explanation about the product are called ______________.

a. up-selling b. comment c. cross-selling d. promotion

7) The concept of consistency in website design includes making sure that ______________.

a. webpages look the same no matter which browser a customer is using b. all visitors consistently find what they are looking for c. the messages sent to customers who contact the company are consistent d. customers are treated consistently when they contact customer service

8) All of the following are potential advantages of building websites internally except:

a. it allows the company to use in-house expertise. b. it allows the company to protect proprietary technology. c. it provides the fastest speed to market. d. it allows the company to exert greater control on the process and the resulting site.

9) Banks are more selective about who gets an account for accepting credit cards online because ______________.

a. dot com failures have made banks less willing to work with online companies. b. CNP transactions are less secure and riskier. c. fees are higher for online processing. d. online transactions do not produce much revenue for banks.

10) Before choosing the appropriate website development option, you need to consider all of the following issues in order to generate a list of requirements and capabilities except:

a. Who are the target customers? b. What kinds of products or services will the business sell online? c. Can customers place orders online? d. What might be the reaction of competitors?

Critical Analysis

Critical Analysis / Case Study Problems

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1. Characterize BPR and BPM.

2. Relate Web analytics to search engine optimization.

Answer Keys

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Key Term Definitions

Angel investor: A wealthy individual who contributes personal funds and possibly expertise at the earliest stage of business development.

Attractors: Website features that attract and interact with visitors in the target stakeholder group.

Business case: A document that justifies the investment of internal, organizational resources in a specific application or project.

Business process management (BPM): Method for business restructuring that combines workflow systems and redesign methods; covers three process categories: people-to-people, systems-to- systems and systems-to-people interactions.

Domain name: A named-based address that identifies an Internet connected server. Usually it refers to the portion of the address to the left of .com and .org, etc.

Incubator: A company, university or nonprofit organization that supports businesses in their initial stages of development.

Information architecture: How the site and its Web pages are organized, labeled, and navigated to support browsing and searching throughout the Website.

Content: The text, images, sound and video that make up a Web page.

Mirror site: An exact duplicate of an original Website that is physically located on a web server on another continent or in another country.

Search engine optimization (SEO): The application of strategies intended to position a Website at the top of Web search engines.

Storebuilder service: A hosting service that provides disk space and services to help small and micro-businesses build a Website quickly and cheaply.

Answer Keys

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Answers to Self Test

1) d

2) c

3) c

4) b

5) b

6) c

7) a

8) c

9) b

10) d

Solutions Guide

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1. Characterize BPR and BPM.

Business process reengineering and business process management are two systems to evaluate and improve business activities to create efficiency and increase organizational effectiveness. Business process management (BPM) is a method for business restructuring that combines workflow systems and redesign methods; covers three process categories: people-to-people, systems-to-systems and systems-to-people interactions.

2. Relate Web analytics to search engine optimization.

Web analytics can be used to better understand what users are interested in. This can then be used to optimize web traffic to focus on these areas of interest.

Notes

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Chapter Sixteen Regulatory, Ethical and Compliance Issues in EC

Learning Objectives

Upon successful completion of this chapter, you should be able to:

1. Understand the foundations for legal and ethical issues in EC.

2. Evaluate civil, intellectual property and common law.

3. Consider legal and ethical challenges and how to contain them.

4. Assess privacy, free speech and defamation and their challenges.

5. Investigate the types of fraud on the Internet and how to protect against them.

6. Critique the needs and methods to protect sellers.

7. Interpret EC-related societal issues.

8. Judge Green EC and IT.

Instructions to Students • Read pages 665 – 701 of your textbook

• Reference: Electronic Commerce: A Managerial Perspective by Efraim Turban, David King, Jae Lee, Ting-Peng Liang, Deborrah Turban, 2010

Overview

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Using the Internet in general, and EC in particular, raises a number of legal and ethical issues. In theory, one can quickly distinguish between legal issues and ethical issues.

Laws are enacted by governments and developed through case precedents (common law). Laws are strict legal rules governing the acts of all citizens within a particular jurisdiction. If a person breaks the law, that person has done something illegal and can be held liable for punishment by the legal system.

In contrast, ethics is a branch of philosophy that deals with what is considered to be right and wrong. Over the years, philosophers have proposed many ethical guidelines, yet what is unethical is not necessarily illegal. Ethics are supported by common agreement in a society as to what is right and wrong, but they are not subject to legal sanctions (except when they overlap with activities that also are illegal).

EC opens up a new spectrum of unregulated activity, where the definitions of right and wrong are not always clear. Business people engaging in e-commerce need guidelines as to what behaviors are reasonable under any given set of circumstances.

Key Terms

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The key terms listed below are terms you should be familiar with. Write your definition below each item. Check your answers at the end of this chapter.

Intellectual property:

Cyberbashing:

Digital divide:

Opt-out:

Opt-in:

Privacy:

Regulatory compliance:

Digital rights management (DRM):

Tort:

Green computing:

Summary

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Laws and regulations are broadly written and can only provide outlines to guide public policy. Simply referring to relevant laws or philosophical principles cannot resolve specific legal disputes or ethical dilemmas. Law and ethics provide systems for achieving both social control and the greater good. As with all systems, the formation of laws is a dynamic process that responds to ever-changing conditions. The nature of law is dynamic so that it can be responsive to new threats to individual rights or failures to perform one’s duties. The Internet not only offers freedom of speech but also widens opportunities for irresponsible activities. Despite laws and technical defenses, new types of spam have emerged to capture customer traffic. The legal framework for EC–both statutory and common law–continues to evolve. To date, the major legal issues in EC have involved rights of privacy, intellectual property, freedom of speech and censorship and fraud. In the absence of legal constraints, ethical codes help to fill the gap. Differences in interpretations of what is legal or illegal often lead to rigorous and even contentious debate.

EC operations are subject to various types of laws–some of which judges create in landmark court cases. Civil law provides companies with ways to get compensated for damages or misuse of their property rights. Laws passed by Congress are being amended to better protect EC. These protections are needed because it is easy and inexpensive to copy or steal intellectual works on the Internet (e.g., music, photos, movies) and to distribute or sell them without the permission of the owner. These actions violate or infringe upon copyrights, trademarks and patents. Although the legal aspects seem fairly clear, monitoring and catching violators remains difficult.

The global scope and universal accessibility of the Internet create serious questions as to which ethical rules and laws apply. Ignoring laws exposes companies to lawsuits or criminal charges that are disruptive, expensive and damaging to customer relations. The best strategy is to avoid behaviors that expose the company to these types of risks. Important safeguards are a corporate code of ethics stating the rules and expected behaviors and actions and an Internet acceptable use policy.

B2C companies use CRM and depend on customer information to improve products and services. Registration and cookies are two of the ways used to collect this information. The key privacy issues are who controls this information and how private it should remain. Strict privacy laws have been passed recently that carry harsh penalties for any negligence that exposes personal or confidential data. There is ongoing debate about censorship on the Internet. The proponents of censorship feel that it is up to the government and various ISPs and Websites to control inappropriate or offensive content. Others oppose any form of censorship; they believe that control is up to the individual. In the United States, most legal attempts to censor content on the Internet have been found unconstitutional. The debate is not likely to be resolved.

Protection is needed for the following reasons: (1) there is no face-to-face contact; (2) there is a great possibility for fraud; (3) there are insufficient legal constraints; and (4) new issues and scams appear constantly. Several organizations, private and public, are attempting to provide the protection that is needed to build the trust that is essential for the success of widespread EC.

Sellers can be cheated by buyers and by other sellers or thieves. Protective measures include using contacts and encryption (PKI, Chapter 10), keeping databases of potential criminals and sharing the information with other sellers, educating employees and using intelligent software.

Summary

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EC brings many social benefits, ranging from improved security, transportation and education to better healthcare delivery and international collaboration. Although the digital divide still exists between developed and developing countries, the advent of mobile computing, especially through cell phones, is beginning to close the gap.

Self Test

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Multiple Choice Questions (Circle the correct answer)

1) Having control over the collection, storage, and dissemination of personal information is included in the category of ____________.

a. property b. rights c. duties d. privacy

2) Due process is a ____________.

a. legal claim that others not interfere with a protected interest b. set of enforceable rules and regulations c. guarantee of basic fairness and fair procedures in legal action d. legal obligation not to interfere with a protected interest

3) A duty is a ____________.

a. legal claim that others not interfere with a protected interest. b. set of enforceable rules and regulations. c. guarantee of basic fairness and fair procedures in legal action. d. legal obligation not to interfere with a protected interest.

4) An online business has the ____________ to prevent spammers or other people from interfering with or harming the benefits (profits) from its EC site and can file lawsuits against them.

a. legal right b. law statute c. liability d. legal obligation

5) Fair use means ____________.

a. that copyrighted material can be used for noncommercial purposes without paying royalties or getting permission b. that a copyright holder has exclusive rights to the invention for a fixed number of years c. that the author or creator of a book, movie, or musical composition can use his or her creations for an unlimited number of years d. that copyrighted material can be digitally protected against misuse

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6) EC and Website safeguards to minimize exposure to risk of legal actions include all of the following except:

a. the website clearly posts shipment policies and guarantees. b. the website clearly articulates procedures for customers to follow when making returns. c. the company checked backgrounds of customers before shipping any products. d. the company checked backgrounds before entering agreements with third-party vendors.

7) Corporate Web policy guidelines include all of the following except:

a. issue word-of-mouth acceptable use policies (AUP). b. make it clear to employees that they cannot use copyrighted or trademarked material without permission. c. post disclaimers concerning content. d. have attorneys with cyber law expertise review Web content.

8) Section 5 of the FTC Act does each of the following except:

a. prohibits unfair or deceptive EC practices. b. gives the FTC authority to take action against companies whose lax security practices could expose customers’ financial information to theft or loss. c. protects privacy. d. requires monitoring of employees’ e-mail.

9) Which of the following statements about the rights to privacy and free speech is not correct?

a. Those rights have an increasingly important role in an information society and to EC. b. As with all rights, the right of free speech is not unlimited. c. The Internet has destroyed the right to privacy. d. Defamation laws put restrictions on what may be freely said or published.

10) The least effective method to protect against pop-up ads and their risk is ____________.

a. pop-up blocking software on users’ computers b. minimizing the pop-up window c. ISPs using tools that stop pop-ups from appearing d. Mozilla and Firefox Web browsers preventing pop-ups

Critical Analysis

Critical Analysis / Case Study Problems

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1. What does business ethics define?

5. Assess authentication and biometric controls.

Answer Keys

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Key Term Definitions

Intellectual property: Creations of the mind, such as inventions, literary and artistic works, and symbols, names, images, and designs, used in commerce.

Cyberbashing:The registration of a domain name that criticizes an organization or person.

Digital divide: The gap between those who have and those who do not have the ability to access electronic technology in general, and the Internet and EC in particular.

Opt-out: Business Practice that gives consumers the opportunity to refuse sharing information about themselves.

Opt-in: Agreement that requires computer users to take specific steps to allow the collection of personal information.

Privacy: The right to be left alone and free of unreasonable personal intrusions.

Regulatory compliance: Systems or departments in an organization whose job is to ensure that personnel are aware of and take steps to comply with relevant laws, standards, policies, and regulations.

Digital rights management (DRM): An umbrella term for any of several arrangements that allow a vendor of content in electronic form to control the material and restrict its usage.

Tort: Civil wrong that can be grounds for a lawsuit.

Green computing: The study and practice of eco-friendly computing resources; is now a key con- cern of businesses in all industries–not just environmental organizations.

Answer Keys

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Answers to Self Test

1) d

2) c

3) d

4) a

5) a

6) c

7) a

8) d

9) c

10) b

Solutions Guide

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Critical Analysis / Case Study Problems - Suggested Solutions

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1. What does business ethics define?

Ethics is the branch of philosophy that deals with what is considered to be right and wrong. Business ethics is a form of applied ethics that examines ethical principles and moral or ethical problems that arise in a business environment.

5. Assess authentication and biometric controls.

Authentication is the process through which you can confirm with whom you are communicating. Biometric controls provide access procedures that match every valid user with a unique user identifier (UID). They also provide an authentication method that verifies that users requesting access to the computer system are really who they claim to be.

Notes

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Unit 4 Examination Instructions

169

The Unit Examination

The Unit Examination contains 25 multiple choice questions, as well as a writing assignment.

Your grade on the examination will be determined by the percentage of correct answers. The University utilizes the following grading system:

A = 90% – 100% correct B = 80% – 89% correct C = 70% – 79% correct D = 60% – 69% correct F = 59% and below correct

4 grade points 3 grade points 2 grade points 1 grade point 0 grade points

Completing Unit Four Examination

Additional detailed information on completing the examination, writing standards and how to submit your completed examination may be found in the Syllabus for this course.

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Unit 4 Examination

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Multiple Choice Questions (Enter your answers on the enclosed answer sheet)

1) Capabilities of the Internet that have made it more difficult for companies to capture profits include all of the following except:

a. the Internet makes information widely available. b. the Internet reduces the difficulty of purchasing, marketing, and distribution. c. the Internet allows buyers and sellers to find and transact business with one another more easily. d. the Internet makes it easier to make secure payments.

2) All of the following are situations when a business plan should be done except:

3) The most efficient way to expand an organization’s scope is _____________.

4) _____________ are the hottest applications in today’s business environment.

a. Virtual worlds b. Rich media c. Social networking technologies d. Online brands

5) All of the following determine the degree of collaboration between offline and online activities in a business except:

a. corporate culture. b. the ability of top management to introduce change properly. c. the pricing strategy. d. the use of innovative processes that support collaboration.

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6) The ____________ pricing strategy means adding up all the costs involved, such as material, labor, rent, overhead, and so forth and adding a percentage mark-up as profit.

a. cost-plus b. competitor model c. revenue markup d. price percentage

7) Implementing EC often requires significant investments in infrastructure. Therefore, a good way to start is to undertake ____________.

a. a large, non-trivial EC project b. one or a few small EC pilot projects c. a multi-divisional EC project d. a single division EC project

8) A ________ is a form of business alliance composed of several business partners that share the costs and resources for the development or production of a product or service.

a. temporary corporation b. supply chain c. virtual corporation d. co-opetition

9) With the balanced scorecard approach, the term balance arises because the combined set of measures is supposed to encompass indicators that are all of the following except:

a. core and non-core. b. financial and nonfinancial. c. leading and lagging. d. quantitative and qualitative.

10) The relationship between EC investment and organizational performance is _____________.

a. direct b. indirect c. shared with other investments d. not measurable

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11) The New York Metropolitan Transit Authority (MTA) did not need to open another airport for almost two decades, even though air traffic had tripled because of productivity gains derived from improved IT systems. IT systems added by the MTA played critical roles in ticket reservations, passenger and luggage check-in, crew assignment and scheduling, runway maintenance and management, and gate assignments. This case illustrates that ___________.

a. intangible benefits can be complex, yet substantial b. tangible benefits can be complex, yet substantial c. tangible costs can be high, yet payoffs can be achieved quickly d. intangible costs can be high, yet payoffs can be achieved quickly

12) Justifying information security projects _____________.

a. is not needed because it is well-known that preventing network security problems is less labor intensive than cleaning up virus infections. b. is not done because ROI calculators are not available. c. should focus on defending against external threats such as hackers and malware. d. should be done because employee security training is usually poorly done.

13) The average-cost curves (AVC) of physical products and digital products are ____________.

a. different because the AVC of digital products declines as quantity increases forming L-shape, while the AVC of physical products is U-shaped. b. both U-shaped. c. both L-shaped. d. different because the AVC of physical products declines as quantity increases forming an L-shape, while the AVC of digital products is U-shaped.

14) All of the following apply to EC in developing economies except:

a. developing economies often face power blackouts and unreliable infrastructure and delivery mechanisms creating limitations that make it difficult for firms to predict whether EC investments will pay off and when. b. developing economies, such as China and India, represent a significant opportunity for EC to connect businesses to customers, as well as other businesses. c. developing economies struggle with various issues that create too many business and technology risks to justify investment in those economies at this time. d. the potential volume of transactions in developed countries can make EC investments more attractive for established firms than new firms because established firms have already recovered the costs of their IT infrastructures.

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15) As a company moves to incorporate an online presence with its traditional brick-and-mortar operation, it adds the costs related to training for all personnel in the capabilities of the EC system and a new advertising campaign to announce its new site to the costs directly associated with building the new Web presence. In this case, training and advertising are examples of ____________.

a. transaction costs b. complementary investments c. direct costs d. indirect costs

16) The greatest difficulty in dealing with venture capital is _____________.

a. the loss of control a venture capitalist demands. b. finding a willing venture capitalist. c. finding the money a venture capitalist will require. d. relocating the business to an incubator.

17) The concept of consistency in Website design includes making sure that _____________.

a. webpages look the same no matter which browser a customer is using. b. all visitors consistently find what they are looking for. c. the messages sent to customers who contact the company are consistent. d. customers are treated consistently when they contact customer service.

18) One of the first decisions to be made in building a Website is _____________.

a. the domain name. b. whether to provide personalized content. c. how to protect the Website from hackers. d. who will host it.

19) Banks are more selective about who gets an account for accepting credit cards online because ______________.

a. dot com failures have made banks less willing to work with online companies b. CNP transactions are less secure and riskier c. fees are higher for online processing d. online transactions do not produce much revenue for banks

20) Before choosing the appropriate Website development option, you need to consider all of the following issues in order to generate a list of requirements and capabilities except:

a. Who are the target customers? b. What kinds of products or services will the business sell online? c. Can customers place orders online? d. What might be the reaction of competitors?

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21) Having control over the collection, storage, and dissemination of personal information is included in the category of _____________.

a. property b. rights c. duties d. privacy

22) A music company can file a _____________ against YouTube and MySpace for any interference with the ability to profit from its IP or for profiting from the recording industry’s property without authorization and compensation. a. criminal charge b. negligence charge c. nuisance charge d. lawsuit or civil charge

23) Section 5 of the FTC Act does each of the following except:

24) Companies can improve their responsibility as custodians of customers’ personal data by implementing _____________.

a. opt-in and opt-out information practices b. AUP c. e-mail monitoring d. firewalls

25) The _____________ gives law enforcement agencies broader range in their efforts to protect the public.

a. American Civil Liberties Union (ACLU) b. Electronic Freedom Foundation (EFF) c. U.S. Department of Justice (DOJ) d. USA PATRIOT Act

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Written Assignment for Unit Four

• Include your name, student number, course number, course title and unit number on each page of your written assignment (this is for your protection in case your materials become separated).

• Begin each written assignment by identifying the question number you are answering followed by the actual question itself (in bold type).

• Use a standard essay format for responses to all questions (i.e. an introduction, middle paragraphs and conclusion).

• Responses must be submitted as a MS Word Document only, typed double-spaced, using a standard font (i.e. Times New Roman) and 12 point type size.

Undergraduate courses: 350 - 500 words or 1 - 2 pages. Graduate courses: 500 - 750 words or 2 - 3 pages. Doctoral courses: 750 - 1000 words or 4 - 5 pages.

Plagiarism

Please answer ONE of the following:

1) Analyze the similarities and differences between laws and ethics.

2) Pinpoint four situations or conditions when separating a company’s online operations into a new company makes sense.

3) Assess five methods for evaluating IT investments.

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Congratulations! You have completed Unit 4. Now let’s sharpen our pencils for the Final Exam.

We are confident you will do well.

Final Examination Instructions

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About the Final Examination

After you have successfully completed all of the unit examinations and writing assignments, it will be time for you to take the final examination.

The final examination will be provided by student services only after you have completed all four unit examinations and submitted all four writing assignments.

Scheduling a Final Examination

Final examination requests can be submitted via U.S. mail, online through the Coast Connection student portal, or by calling the Testing Department at (714) 547-9625.

A final exam scheduling form is located on the last page of this study guide. Please fill out ALL required fields and mail it to the university.

Final exams will only be sent if you have completed all four unit examinations and submitted all four writing assignments.

Submitting Your Final Examination

Final Examinations can be submitted by mail, fax or online through the Coast Connection student portal.

After you have completed your exam, you or your proctor can fax it to the Grading Department at (714) 547-1451 or mail it to the university. When faxing exams, please do not resize your fax.

Final Exam Scheduling Form

BAM 570 E-Commerce Management

The university requires all final examinations to be completed under the supervision of a proctor. Please provide information on your designated proctor. ALL information must be filled in; otherwise, your request will not be processed.

Date _____________________________ Student I.D. ______________________________________________

Student Name ________________________________________________________________________________

Address ______________________________________________________________________________________

City __________________________________________________ State _________________________________

Zip Code ________________ Country ____________________________________________________________

E-Mail Address _______________________________________________________________________________

Daytime Telephone _____________________________ Evening Telephone _____________________________

Course Information:

Course Number ___________ Course Title _______________________________________________________

Please send the Final Examination to:

Proctor’s Name _______________________________________________________________________________

Proctor’s Relationship to Student ________________________________________________________________

Street Address _______________________________________________________________________

City ______________________________ State _________________ Zip Code __________________________

Country __________________________________ Email Address ___________________________

Daytime Telephone _________________________ Evening Telephone _________________________________

Student’s Signature ________________________________________________________________________

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